WPP’s Q3 Growth Slows

BOSTON WPP Group today attributed a slowdown in third-quarter growth to weakness in the U.K. and other European markets, though Q3 revenue did improve 4.5 percent to $2.67 billion from the same period a year ago.

On a like-for-like basis, excluding the impact of acquisitions and currency fluctuations, worldwide Q3 growth was also 4.5 percent. The improvement was nearly 8 percent measured in constant currency terms.

With the exception of Europe, WPP performed well in all global markets. In constant currency terms, revenue improved nearly 16 percent in the Asia Pacific, Latin America, Africa and Middle East sector, and more than 8 percent in North America. Continental Europe and the U.K. lagged somewhat, improving 4.5 and 1.5 percent, respectively.

In a statement, WPP noted “pressure” in the U.K. as a contributing factor in its overall performance, a reference to the advertising downturn plaguing British print and electronic media.

WPP said its public relations operations tallied 14 percent revenue growth in Q3, following by a 12 percent gain by its branding, healthcare and specialty firms (including WPP’s interactive communications shops). Consulting services grew 8 percent and traditional advertising was up 4 percent.

The London-based holding company said it has won $1.4 billion in net new business during the quarter, raising its nine-month total to $5.5 billion, up 20 percent over the first two-thirds of 2005.

So far this year, WPP has posted global like-for-like revenue growth of nearly 5 percent. In constant currency terms, the gain exceeds 10 percent.

WPP said its operating margin remains are in line with its full-year target of 14.5 percent, compared with 14 percent in 2005.

“The latest forecasts show that the group is on track to meet its target for this year, despite continued concerns among some commentators about the prospects of the United States economy, its twin deficits, the indebted consumer and the direction of interest rates and commodity prices,” WPP said in a statement.

In accordance with U.K. accounting practices, WPP discloses net income at the half- and full-year marks.

WPP is the world’s No. 2 agency holding company, trailing only Omnicom Group. WPP noted that it continues to gain market overall share, and some project it could finish the year atop the holding-company rankings.

Omnicom released its Q3 financial Tuesday, reporting a 10 percent revenue increase to nearly $2.8 billion [Adweek Online, Oct. 24].

WPP made several strategic and personnel moves during the quarter, investing $3 million in online videogame company WildTangent and inking a partnership with Visible Technologies, a Seattle-based company that monitors brand reputations in the blogosphere and social networking sites like MySpace.

In a nod to the increasing importance of Asian markets, Michael Maedel, worldwide president of WPP’s JWT, said he would relocate from the agency’s London office to Singapore. And Chris Jaques, the former CEO of WPP’s Y&R in Asia, was named chief executive of the agency’s North American operations.