In one of the most dramatic signs of industry recovery yet, WPP Group said its Q3 revenue showed the highest quarterly improvement the company has seen in a decade.
The Ireland-based holding company was particularly effusive in underscoring the contribution of the American market, saying: The United States, which was the first region hammered by the global financial crisis, has been the first to recover and is "continuing to behave more like an emerging market than a mature one."
Revenue jumped 12.2 percent to $3.59 billion. Excluding the impact of acquisitions and currency fluctuations, revenue rose 7.5 percent, a considerable improvement over the first half, when the company posted flat revenue in Q1 and 4.7 percent growth in Q2.
While WPP expects a "good" fourth quarter, the company said those growth levels can't be indefinitely sustained. "Other than June, where there was a minor rate fall, there has been sequential monthly improvement in like-for-like revenues in each month of 2010, which obviously cannot go on forever," the company cautioned.
Still, there is little doubt about strengthening industry fundamentals as reflected in WPP's results and those of other industry holding companies currently reporting. WPP noted a broader geographic pattern of improvement. The U.K. improved "significantly," with revenue up 7.4 percent; Western Continental Europe, although still the company's slowest growth region, showed a "marked" uptick, with revenue growing 6.1 percent. Asia-Pacific, Latin America, Africa and Central and Eastern Europe also showed "considerable" improvement, with revenue increasing 8.3 percent. The Middle East was the only sub-region to show some softness, with a decline in revenue. Mainland China and India continue to lead in Asia, with revenue up over 23 percent and nearly 15 percent, respectively.
WPP said the pattern of growth across marketing disciplines also strengthened throughout most of its operating units. Among the sectors the company singled out as showing the most improvement, compared to the second quarter, are advertising and media investment management; branding and identity; and healthcare and specialist communications, which includes direct, digital and interactive business. For the first nine months, net new business billings rose over 50 percent to $4.8 billion.
But beneath the ebullient third-quarter headline is some worrying fine print. As WPP noted in its results: "It seems difficult to believe that the United States will continue to behave like an emerging market -- growing this year, so far, for us at 8 percent, whilst GNP grows at 2 percent."
WPP also acknowledged that clients' marketing budgets could still be affected by lingering uncertainties about Eurozone contagion, American consumer demand, deficit reduction, increased taxation, currency wars and protectionism at election time.
Separately, WPP Digital said it is investing $5 million in New York.-based Buddy Media, a Facebook management system that works with advertisers like Procter & Gamble, Anheuser-Busch, L'Oreal and Samsung.
Among WPP's rivals reporting quarterly results:
IPG Makes Strides
Mixed Q3 for MDC
Publicis' Q3 Revenue Beats Expectations
6.7% Revenue Rise for Omnicom Group
Havas Sees 5.4% Gain in Q3