WPP Posts 2.1% Organic Growth in Q1, But U.S. Is Flat

So Far, 2013 Looks a Lot Like Last Year

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WPP posted organic revenue growth of 2.1% for the first quarter of 2013, but saw a 1% drop in North America while the U.K. was unusually strong with 3.7% organic growth. In dollars, WPP said its worldwide revenues totaled $3.917 billion in the first quarter.

Organic growth is like-for-like growth, excluding the impact of acquisitions and currency fluctuation. Looking at total revenue growth including acquisitions and exchange rate moves, WPP saw worldwide revenue grow by 5.9% in the first quarter. By that measure, North America was up by 2.5% and the U.K. by 11.9%.

WPP noted that 2013 so far is following a pattern set in late 2012, with improvement in all disciplines except public relations and public affairs, and slowing growth in mature markets like the U.S. and Western Europe, except for a bright spot in the U.K.

"Concerns globally about the grey swans including the Eurozone crisis, the Middle East, a Chinese or BRICs hard or soft landing and, perhaps, most importantly, dealing with the U.S. deficit and a record $16 trillion of debt, continue to make clients reluctant to take further risks, despite stronger balance sheets," WPP said in a statement.

Clients are focusing on building their brands in both the fastest-growing countries and areas including media and digital, the company said. WPP's fastest growth came from Latin America, with 12.5% organic growth.

For digital, organic revenue was up by 7.5% in the first quarter, and now accounts for 34% of the company's revenues, up 3.1 percentage points from the previous year.

Among WPP's ad agency networks, Y&R and Grey had a strong start to the year, especially in the U.S., where Y&R won JC Penney this week .

For WPP, 2013 looks much the same so far as 2012, with "slightly increased client confidence" possibly balancing the lack of major ad-generating events like the Olympics or a U.S. presidential election.

The company sees better prospects in 2014, when the World Cup in Brazil, the Winter Olympics in Russia, and mid-term Congressional elections in the U.S. are likely to boost ad spending.

WPP has made 13 acquisitions so far this year, focusing mostly on new media in developing markets. Net new business totaled $1.50 billion, down from $1.86 billion in the first quarter of last year.

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