2Q 2016: PR Up 3% As WPP 'Grinds Out Growth'
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2Q 2016: PR Up 3% As WPP 'Grinds Out Growth'

WPP's PR and public affairs firms grew 3% during the second quarter of this year, bringing 1H growth to 2.7%.

Holmes Report

2Q 2016: PR Up 3% As WPP 'Grinds Out Growth'

LONDON — WPP's PR and public affairs firms, which include H+K Strategies, Burson-Marsteller, Ogilvy PR and Finsbury, today reported like-for-like growth of 3% during the second quarter of 2016.

The results mean that the marketing services giant's PR and PA unit has grown 2.7% on a like-for-like basis during the first half of this year to £499m, with second-quarter growth exceeding the 2.3% recorded in 1Q 2016.

WPP CEO Sir Martin Sorrell attributed the performance to growth across all regions
"particularly in Asia Pacific, Latin America and Africa."

Sorrell again singled out Cohn & Wolfe for praise, along with "parts of the specialist public
relations and public affairs businesses in the United States and Germany."

Cohn & Wolfe, added CEO Donna Imperato, has grown more than 13% in the first half of 2016, and is on track to deliver its third year of double-digit growth. "Integrated marketing work is our key growth driver globally, across all business sectors, and we expect that momentum to continue into 2017," said Imperato.

PR and PA firms reported a slight decrease in margin to 14.4% for 2Q 2016, although Sorrell noted that "H+K Strategies, Ogilvy Public Relations, Cohn & Wolfe and the specialist public relations companies in this sector showed improved margins in the first half."

Growth at WPP's PR and PA firms lagged its sister disciplines of advertising and media investment management (+5.4%) and branding, healthcare and specialty (+3.4%). Overall, the group reported a like-for-like revenue increase of 4.3% for 2Q 2016, with profits up 10%.

Sorrell added that WPP is "grinding out growth" amid slowing global GDP expansion. Clients, said Sorrell, remain cautious and focused on cost-cutting. Legacy businesses are especially challenged, he continued, thanks to disruptive competitors such as Airbnb and Uber; "cost-based budgeters" like 3G and Coty; and short-term focused activist investors.

Sorrell also pointed to continuing geo-political uncertainty, notably around Brexit and the EU, along with "the rise of populism at both ends of the political spectrum."

"Having said all this, there are positives," said Sorrell. "Countries and opportunities like Indonesia, the Philippines, Vietnam, Egypt, Nigeria, Mexico, Colombia and Peru and recently a post-Macri Argentina add to confidence. In addition maybe Cuba and even Iran (despite the continuing effective impact of sanctions, especially on US citizens) will also improve the sentiment along with a continuing mild recovery in Western Continental Europe."

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