WPP Records Sluggish Q1

BOSTON WPP Group today for the most part blamed the 11 percent decline in the value of the U.S. dollar against the U.K. pound sterling for basically flat Q1 revenue of about $2.74 billion compared to the same period a year ago.

On an organic basis, excluding acquisitions and currency fluctuations, WPP’s Q1 revenue improved nearly 4.5 percent, while the upturn was almost 6.5 percent on a constant currency basis, the holding company said.

The London-based company, led by CEO Martin Sorrell, also said operating margins and profitability for Q1 were on track to attain its full-year margin target of 15 percent.

The company’s strongest performance came in the Middle East, which posted a 22 percent organic revenue gain for the quarter. Latin America and the Asia-Pacific region each posted gains of about 10 percent. (China and India were especially robust, surging more than 20 and 15 percent, respectively.) The revenue rises in North America and Europe were each roughly 5 percent.

In a statement, the company projected increased ad spending across its broad client base toward year’s end in the run-up to the U.S. presidential elections and Beijing Olympics.

By services sector, public relations and public affairs showed the strongest growth with organic revenue up almost 13 percent, with branding and identity, healthcare and specialty communications (including direct, Internet and interactive services) up over 9 percent. Advertising and media management rose more than 4 percent.

WPP said net new business for the quarter was slightly more than $1 billion. The company’s holdings include Ogilvy & Mather, Young & Rubicam, Grey, MindShare and MediaCom, among others agencies.

On a personal note, Sorrell during the quarter settled a high-profile U.K. libel lawsuit, accepting about $236,000 in damages from former WPP Italy chief Marco Benatti and Marco Tinelli. Benatti is also the founder of Italian media firm FullSix; Tinelli is its CEO.

Sorrell accused Benatti and Tinelli of generating libelous claims posted on an Internet blog, as well as disseminating an offensive image of Sorrell with Daniela Weber, WPP Italy COO, who had a past personal relationship with Sorrell.

The case generated worldwide headlines for its novel digital communications libel claim and its reference to Sorrell as “the mad dwarf” and Weber as “the nympho schizo.” Weber was party to Sorrell’s invasion of privacy action and was awarded $59,000.