Arun Sudhaman 29 Aug 2013 // 7:25AM GMT
LONDON—Public relations revenue has dropped to 8.6 percent of WPP's total earnings, after the holding group reported a 3.6 percent decline in PR revenue during the first half of the year.
Public relations and public affairs revenue totalled £458m in the first half of this year, accounting for 8.6 percent of group earnings, down from 9.2 percent one year earlier.
The results saw the group's PR firms, which include Burson-Marsteller, Hill + Knowlton Strategies and Ogilvy PR, record a 3.1 percent like-for-like decline in the second quarter of the year, after declining by 4.1 percent in Q1.
PR operating margins fell to 13 percent during the first half of the year, down from 13.5 percent for the same period in 2012.
Public relations and public affairs was the only one of WPP's four disciplines to decline, continuing its pattern of lagging advertising and media investment; data analytics; and, brand identity and specialist communications. WPP's PR firms also declined in terms of revenue and profit in 2012.
On a reported basis, the unit grew by one percent in the second quarter of 2013.
In a statement, WPP CEO Sir Martin Sorrell said the PR sector "reflected continuing client examination of discretionary spending, particularly in mature markets."
He pointed to "some improvement", compared to Q1, in the US, Western Continental Europe, Africa and the Middle East and Asia-Pacific, but "the United Kingdom was slower".
"Reported operating margins fell 0.5 margin points to 13 percent, but H+K Strategies, Cohn & Wolfe, Penn Schoen & Berland and RLM Finsbury showed improving margins in the first half," added Sorrell.
Overall, the group reported like-for-like revenue growth of 2.4 percent to over £5.3bn. "Continuing concerns globally about the grey swans, including the Eurozone crisis, the Middle East, a Chinese or BRICs hard or soft landing and, perhaps, most importantly, dealing with the US deficit, a record $16 trillion of debt and the consequent sequester, continue to make clients reluctant to take further risks, despite record profitability and stronger balance sheets," said Sorrell.