NEWS3 June 2011

Resilience in tough times ‘proves value of research and marketing’ says WPP

Financials News UK

UK— WPP says its resilience in tough economic times has been “a powerful vindication” of the value of research and marketing services.

Chairman Philip Lader (pictured) told yesterday’s AGM: “Even in good times, our client companies don’t spend money on research and marketing without sound reason. When times are more difficult, every last item of expenditure is examined and tested and expected to justify its existence by contributing to the maintenance of commercial health. So I am very happy indeed to report that, however painful in part these last few years have been, they have delivered a powerful vindication of the value of the services our sector provides.”

However it was not enough of a vindication to stop 42% of WPP’s shareholders voting against its remuneration report, which awards a total of £7m to its three executive directors.

The group reported a slight slowdown in growth for its consumer insight companies since the end of the first quarter, highlighting slow performance in the US, the UK and Japan. For the first four months of 2011, revenue was up by just under 3% on a constant currency basis, compared to the same period last year. The figure for the first quarter was 3.4%.

In May, Eric Salama, head of WPP’s insight division Kantar, replaced Pedro Ros as CEO of its biggest company TNS, saying the business was “stable but not performing at the top of its game in some markets”.

Growth in the group’s insight companies is behind that of the group as a whole, which saw revenues grow by 6.2% on a reportable basis or 7.8% on a constant currency basis.

Small and medium-sized consumer insight companies continue to be among the firm’s acquisition targets, said Lader, with the most likely targets being firms making “at least £200 million per annum”. “We will continue to seize appropriate opportunities in line with our strategy,” he said.

Despite concerns about economic conditions Lader said the firm remains “cautiously optimistic” about its prospects for this year and next year.