Big account wins keep ad group WPP at front of pack
LONDON, March 4 (Reuters) – WPP outperformed global advertising rivals Omnicom and Publicis by winning big accounts in 2015, beating sales forecasts and saying it had made a solid start to 2016 despite some difficult markets.
The world’s largest ad group said on Friday strong demand in North America, Britain and the big markets of Europe helped it post its best growth of the year in the fourth quarter, and make a solid start to 2016.
New account wins from companies such as Unilever, L’Oreal and Tesco helped WPP to secure 5.6 billion pounds ($7.9 billion) worth of net new business in the year, putting it at the top of the league table for new work for the fourth year in a row.
"We see WPP as the best positioned of the agencies group," said analysts at Liberum, noting the broad geographical footprint and the fact Publicis has struggled since it withdrew from a planned merger with Omnicom in 2014.
The Ogilvy & Mather and JWT owner echoed U.S. group Omnicom and French ad agency Publicis with a solid end to 2015.
Although analysts welcomed the results, noting cost controls had helped lift operating margins, its shares gave up early trading gains and were down 0.5 percent at 0930 GMT, with some noting that the outlook remained cautious.
While events such as the Rio Olympics and U.S. Presidential election should boost sales, low oil prices, global economic uncertainty and the potential that Britain could leave the European Union in a June referendum were all likely to temper clients’ willingness to spend big on advertising.
WPP reported fourth-quarter like-for-like net sales growth of 4.9 percent, the strongest quarter of the year, giving it a full-year figure of 3.3 percent, slightly ahead of forecasts.
The group said it expected to produce a similar net sales growth rate for 2016 with an improvement in profitability and said it had already enjoyed an above-budget month in January.
The strong pace means WPP has continued to keep the pressure up on its biggest rivals due to its broad geographical spread and its strong growth in digital sales.
Chief Executive Martin Sorrell said that while Brazil, China and Russia were currently challenging, markets such as India and Indonesia were performing well.
WPP was one of the first ad groups to target emerging markets such as China and it now has a target of making 40-45 percent of sales from digital media and faster growing nations over the next five years.