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Q1 2015: India continues strong growth for WPP; China weakens

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MUMBAI: In the first quarter of 2015, India continued the strong growth seen for WPP in the Asia Pacific market, with China being a little weaker.

In the first four months, WPP’s revenue was up eight per cent to ?3.8 billion in sterling. However, in dollar, revenue was down 1.9 per cent at $5.698 billion and up 21.4 per cent at €5.129 billion in euros.

On the other hand, its advertising and media investment management revenue increased 13 per cent in constant currencies, and 9.9 per cent on a like-for-like basis, which excludes the impact of acquisitions and foreign currency fluctuations.

Asia Pacific, Latin America, Africa & the Middle East and Central and Eastern Europe, softened slightly in April, but still at high levels of absolute growth, with year-to-date constant currency revenue up 10 per cent and like-for-like up 5.6 per cent. Net sales were up 8.3 per cent in constant currency and 3.1 per cent like-for-like in the first four months, compared with 9.1 per cent and 4.0 per cent respectively in the first quarter.

“The faster growth markets of the BRICs and Next 11, located in Asia, Latin America, Africa & the Middle East and Central & Eastern Europe continue to grow faster than the slower markets of North America and Western Europe, although the growth gap has narrowed as Brazil, Russia and China have slowed and the United States and United Kingdom have quickened,” said WPP chairman Philip Lader at the company’s 43rd annual general meeting held in London.

Agency reviews due to digital media shift cost $20 billion

Furthermore, in light of the shift to digital media, many brands have been looking at reviewing their advertising agency accounts and marketing spends. These reviews represent about $20 billion in billings.

 

“There has been some commentary recently on the significant number of media investment management reviews, particularly, in the United States, which we believe has been driven primarily by clients’ desire to optimise their media spending, in an increasingly digital media environment. These reviews total approximately $20 billion in billings,” said Lader.

However, Lader added that WPP is particularly well positioned to compete in these pitches as it is an incumbent in less than a quarter of these reviews.

According to Lader, 2015 should follow a pattern similar to 2014 but sans maxi or mini-quadrennial events like the Olympics, FIFA World Cup or United States Presidential Election (as there will be in 2016) to boost marketing investments.

For the remainder of 2015, WPP’s focus will remain on growing revenue and net sales faster than the industry average, driven by its position in the new markets, in new media, in data investment management, including data analytics and the application of new technology, creativity, effectiveness and horizontality.

Providing a cautious economic outlook for 2015, Lader said, “All in all, 2015 looks to be another demanding year. Even in the best of times, successful companies are careful in their allocation of promotional funds. But when times get tougher, carefulness tends to be replaced by caution. A certain nervousness infects the entire enterprise. Costs are trimmed... and trimmed again. Investment is postponed. Much of this, of course, is prudent and necessary; but there’s a lurking danger. What were first adopted as temporary tactics almost imperceptibly become a permanent strategy. And when that happens, companies may fail to take early advantage of any up-turn. The long-term becomes no more than an indefinite extension of the short-term.”

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