Earnings: WPP Revenue Slides But Digital Target On Track


In the first half of 2009, advertising group WPP made one quarter of its revenue from its digital activities, showing that advertisers are investing in new online ways to track, measure and expose their brands in the recession. In an unaudited interim report covering the six months to June 30, the London-listed company says it made $1.7 billion (£1.03 billion), while 61 percent of revenues came from outside traditional “advertising and media investment management” compared to 55 percent in H108 — meaning the company is on course to making two thirds of its revenue from new business models.

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Revenue slump: The company’s strategy might be going in the right direction but thanks to the recession, it’s numbers aren’t. The company made revenue of £4.28 billion in H108 — at constant currencies that’s 8.6 percent more than in H109 but without the impact of acquisitions (it bought TNS last year), on a like-for-like basis revenue was down 8.3 percent. This is worse than the company expected, or hoped for: CEO Sir Martin Sorrell predicted a two percent revenue drop for the whole of 2009 and that was revised down to four percent drop for H109 — in reality the drop is twice as bad. Pre-tax profits were 35.2 percent lower at £252.2 million — a 45.1 percent drop at constant currencies.

Outlook: Some qualified optimism from WPP: “There is little doubt that CEOs and CMOs feel better about the general economic environment (but) Armageddon or Apocalypse now having been averted, there is little evidence of better heads and stouter hearts translating into stronger order-books or investments

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