Market analysts like the advertising sector at the moment.
The share price of WPP, the world’s biggest advertising group, rose 10% in the week it announced September quarter results showing like-for-like growth of 6.9% when compared to pre-pandemic 2019.
It’s all about how fast revenue has rebounded following the slump of 2020.
Other major international advertising groups have also reported better than expected revenue lifts.
Publicis Groupe grew 5% in the September quarter compared to the same three months in pre-pandemic 2019. IPG's organic growth was 10.7% compared to the pre-pandemic September quarter in 2019.
WPP’s media agency GroupM is a standout. In the September quarter, growth was 14.6% when compared to the same quarter in pre-pandemic 2019 and 19% on 2020.
CEO Mark Read, briefing market analysts: “There's no doubt that advertising spend has bounced back strongly this year, and that's reflected in GroupM's performance.”
Overall, the company’s like-for-like growth was 6.9% in the September quarter when compared to 2019.
Against the same three months in 2020 -- when ad spend was dragged down by COVID-19 restrictions -- it was up 14.7%. Reported revenue was £3.24 billion, up 9.1% for the three months.
The company now expects full year like-for-like revenue less pass-through costs to be 11.5%-12.%, up from previous guidance of 9% to 10%.
“We had good growth in all of our major markets and a good new business performance,” Read told analysts.
“We started the year, I'd say, with probably more business at risk than we did the year before. And we've had a good track record in retaining and expanding and winning new clients.”
Here’s the wins from August:
Mark Read: “We are pleased with our ability to retain clients like Unilever, expand relationships like Bayer, and develop new relationships in the media area with clients like Beiersdorf, Sainsbury's or TD Bank creatively. A good mix of media and creative wins.
John Rogers, WPP’s chief financial officer, outlined strong performance from GroupM and also continued double-digit like-for-like growth at Hogarth and VMLY&R.
AKQA Group, Ogilvy, Wunderman Thompson are showing an improving two-year trend compared to the second quarter of this year.
WPP’s long march on simplifying the business continues.
“For example, within our creative agencies, we've greatly simplified our country model, and we've actually consolidated agencies in certain markets where there isn't a critical mass in those markets to support multiple agencies.
“Equally, for example, within GroupM, we're also doing some work internally within GroupM … looking at the structure there and how we can eliminate and take out duplication within GroupM itself.”
Public Relations
A surprise has been the strength in WPP’s public relations businesses. This budget is usually an early victim in a downturn.
Growth in the third quarter was 16%, a rise from the second quarter of 12.9%.
Read: “We did see an acceleration in our PR business in the second quarter to the third quarter and -- which is interesting because in previous times, public relations has often been the first part of our business to be cut. That wasn't the case during COVID.
“But the scope of the services has continued to increase coming out of COVID. If you read the newspapers, frankly, it shouldn't be any surprise. Topics of purpose, reputation, employee activism, political polarisation, racial challenges are all on top of people's minds and issues that companies are increasingly expected to wrestle with and have a point of view.
“As a result, there's been a lot of demand from clients for guidance and counseling programs on how to address those.”
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