LONDON—WPP Group—parent of Burson-Marsteller, Cohn & Wolfe, Hill & Knowlton, Ogilvy Public Relations Worldwide and numerous smaller PR brands—saw its public relations and public affairs revenues decline by 8.5 percent on a like-for-like basis for the third quarter, as the large multinational agencies continued to suffer through the global economic crisis.
Overall, WPP’s like-for-like revenues dropped about 8.7 percent, although the group predicted an improvement in performance heading into 2010—although that was ahead of many analysts’ predictions and an improvement over the 10.5 percent decline recorded in the second quarter. PR also improved slightly, after posting a 9.7 percent decline in the second quarter.
The company’s U.S. operations put in their best performance of the year so far, but the U.K. saw another decline as it lags other developed markets in emerging from the downturn.
"As the company's revenue growth figures for the third quarter indicate, things are certainly 'less worse' than the second quarter and July, August and September have all shown improvement over April, May and June," WPP said in a statement. "This sequential quarterly improvement should continue into the fourth quarter of 2009 and into 2010, for the same reasons, although the real test may come when governments and independent central banks decide to reduce or withdraw fiscal and monetary support to avoid higher interest rates and inflation."
The company is now predicting what it calls a “LUV-shaped” recovery, which means an L-shaped recovery for western Europe (including the U.K.), a U-shaped recovery for North America and a V-shaped bounce back for Brazil, Russia, India, China and the "next 11" emerging economies.
Speaking at a conference hosted by CorpComms magazine and the Public Relations Consultants Association the day before the results were announced, WPP chief executive Sir Martin Sorrell was critical of practices in the PR industry, suggesting that agencies often gave away their best ideas for free.
“Since when do McKinsey, Bain and BCG sit in front of clients and deliver for nothing?” Sorrell asked the audience. 'The request for proposal process is still a long process and it's all for free.” He said the situation was unlikely to change because overcapacity in the industry meant “there will always be competitors that are prepared to pitch for free.”