Companies are investing in brand building to maintain or grow market share, says WPP chief executive Sir Martin Sorrell, as the marketing services company reports a 7.6% increase in first quarter revenue.
The owner of advertising and media agency networks such as Ogilvy & Mather, JWT and MediaCom posted revenue of £2.39bn for three months to 31 March, up from £2.22bn in the same period a year earlier.
Gains were by driven by demand for marketing services in developing markets in the Asia Pacific, Latin America, Africa, the Middle East and Central and Eastern Europe regions. Revenue from these markets increased 11.2% to £681m in the period.
In the UK, which accounts for 12% of the company’s revenue, income grew 5% to £284m. Revenue from the company’s North American business, by the far its biggest accounting for 36.3% of all receipts, grew 6.9%.
Sir Martin says the revenue increases are evidence that companies are still willing to invest in growth despite concerns about the Eurozone crisis and declining consumer and corporate confidence in many markets.
He adds: “They [companies] are prepared to invest in brands to maintain or increase market share even amongst slower growth Western markets, such as the United States and Western Europe.
“This has the virtue of not increasing fixed costs, although we in the communications business regard brand spending as a fixed investment and not a discretionary cost. This positive double-whammy is clearly benefiting our industry once again this year…”
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