British multinational WPP still top of the heap

WPP strengthened its position at the top of the advertising industry last year as its geographical reach and strong digital sales gave it the edge over its two closest rivals, who were distracted by a failed merger.

British multinational WPP still top of the heap

The British company, run by the high-profile Martin Sorrell, said yesterday that 2015 had started strongly with an increase in January trading, helped by standout performances in the US and China.

WPP’s reassuring outlook and the January performance marked a slight improvement in sentiment from an October update, when Mr Sorrell said trading in the fourth quarter was set to be tough.

“After coming across less upbeat in the last two quarters, shareholders should be pleased with the performance over the full year,” said Lewis Sturdy, a trader at London Capital Group.

WPP, which counts the likes of Ford, Unilever, and Microsoft among its clients, reported a 3.3% rise in 2014 like-for-like net sales and that measure rose by 3.9% in January. The measurement more commonly used by its rivals, like-for-like revenue, was up 8.2% in 2014, comfortably ahead of the 5.7% growth recorded by Omnicom, the top US advertising company, and a 2% rise at France’s Publicis.

Omnicom and Publicis tried to merge in 2014 to leapfrog WPP as the world’s biggest advertising group, prompting many clients to reconsider their contracts. While Omnicom stabilised relatively quickly, Publicis has taken longer to recover.

WPP, owner of the JWT and Ogilvy & Mather agencies, said it had topped the industry’s new business table for the third year running in 2014 and expected solid growth in 2015 following a number of recent big contract wins.

WPP had revenue of $18.96bn (€17.5bn) in 2014, outpacing Omnicom with $15.3bn and Publicis on $7.9bn.

With big brands moving large chunks of advertising spend online to reach the millions of people on social networks and traditional sites, WPP has historically been well placed as it had the greatest exposure to digital advertising.

That may be challenged, however, after Publicis moved to buy digital specialist Sapient.

WPP also noted that trading in its home market could be affected by Britain’s May 7 parliamentary election, which is shaping up to be the most unpredictable in a generation and will likely result in another coalition government.

Reuters

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