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WPP motors ahead in Q3 but data business still disappoints

WPP has posted reasonably strong numbers in Q3, with like-for-like revenue up 4.6 per cent and net sales up 3.3 per cent – both slightly below target but pretty creditable given the headwinds the company has faced in its preferred growth markets of Asia and Latin America.

Of the big marcoms companies to have reported so far Interpublic is the star performer with organic growth of seven per cent, Omnicom is second. Publicis Groupe is by far the worst performer with growth of less than one per cent. The rather smaller Havas is also performing well.

Unknown-1WPP watchers might speculate on what the results might have been were it not for the huge investment in what CEO Sir Martin Sorrell (left) calls ‘data investment management,’ research outfit Kantar. Although Kantar is the biggest division by volume after advertising and media buying it still, stubbornly, refuses to grow.

In any other company it would be chopped off and sold but Sorrell is adamant he needs ‘data investment management’ to fuel his other activities.

Once again the US was the beret performing region for WPP with the UK second. Western Europe is recovering it seems and Sorrell expects the Far East and Latin America to begin motoring again at the end of 2015.

Are there any clouds on WPP’s horizon? China is a worry although the company seems confident enough. The big round of media reviews has left WPP pretty well where it was so far.

Clients, though, have realised that media agencies are making more profit than the agreed margins on their deals. So where’s the rest coming from?

In WPP’s case a lot is from its Xaxis operation, which we might call ‘digital media arbitrage’ if we’re being posh. Sorrell has never made any bones about this but some clients might not like it all the same.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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