WPP, the world’s largest communications network by revenue, has cut its growth forecast for 2011 because of sluggish economic growth in the US and Western Europe.
The marketing services company, which owns agency networks JWT and Ogilvy & Mather and market research company TNS, forecasts like for like revenue will grow 5% for the full-year, down from the 5.9% previously expected. The company, however, is hoping that 0.5 point improvement in operating profit margin will offset lower revenue.
The Sir Martin Sorrell (pictured) led company made the prediction after reporting like for like revenue growth of 4.7% in the three months to 30 September. Growth in Asia offset slower gains in the US and Western Europe.
Advertising and media investment, which accounts for 41% of WPP’s total revenue, was up 6.3% on the same period last year. Third quarter digital revenue accounted for about 29% of the total.
WPP’s like for like gain, which strips out the impact of acquisitions, is slower than that of main rivals Omnicom and Publicis, which recently reported growth of 7.2% and 6.4% respectively.
Despite economic uncertainty caused by the Eurozone crisis and the slower than expected recovery for the US economy leading to “nervous” clients cutting back spending in developing markets this year, the football European Championships, London 2012 Olympics and the US Presidential elections mean the prospects for 2012 “do not look dire”, the company says.
It adds that clients continue to invest in brand amid slow growth, predominantly in western markets.
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