DUBLIN, IRELAND: WPP Group's PR and public affairs revenue fell 1.7% on a like-for-like basis to $366.3 million in the third quarter.
In the first nine months of the year, PR and public affairs revenue was down 0.1% on a like-for-like basis to $1.1 billion, compared with the same period of last year.
The holding company attributed the decline to lower revenue in North America, while the UK experienced “strong growth” and Latin America and Africa saw double-digit like-for-like growth.
Last year, WPP reported 7.4% third-quarter growth in its PR and public affairs business on a constant-currency basis.
WPP owns and operates Ogilvy Public Relations, Hill+Knowlton Strategies, Burson-Marsteller, and Cohn & Wolfe, among others.
WPP said in a statement that it was a “difficult third quarter, particularly in September” for PR and public affairs. Meanwhile, advertising and media investment management were the “strongest discipline, followed by branding and identity, healthcare and specialist communications where direct, digital, and interactive revenues continue to drive overall growth.”
The holding company also said it is expecting a tough final quarter.
“Early indications are that revenues in the final quarter of the year will grow less than in the third quarter, with an improvement in Asia-Pacific and continental Europe offset by a weakening in North America and Latin America,” the holding company said in its earnings statement. “Functionally, consumer insight and public relations and public affairs, branding and identity, healthcare and specialist communications are forecast to grow less than in the third quarter.”
“We're actually really strong in North America, and our overall growth is going to be very strong year-on-year,” said Donna Imperato, CEO of Cohn & Wolfe. “I do know, overall, speaking to a lot of firms, that a lot of people are seeing softness in North America versus other regions, and nobody seems to know the reason. It might be that the global economy is putting some pressure on the US, or that earnings reports by some major corporations were not as good as expected, so some clients are starting to cut budgets. It was a bit of a surprise for a lot of agencies that North America is not performing as well.”
Overall, WPP reported a like-for-like revenue increase of 1.9% in the third quarter to $4.03 billion.
The holding company earned $1.4 billion in net new business in Q3, down from $2.3 billion in the previous year.
The holding company's growth was slower in the third quarter than the second quarter “particularly in North America and continental Europe, and functionally in advertising and media investment management and public relations and public affairs,” it said in a statement.
In North America, where the holding company saw revenue shrink 0.4% on a like-for-like basis in the quarter, its “strong growth…in advertising and media investment management business” was “more than offset by weakness in the group's consumer insight, public relations and public affairs, and branding and identity, healthcare, and specialist communications businesses.” North American revenue fell 0.4% on a like-for-like basis to $1.4 billion in the quarter.
In the first nine months of 2012, North American revenue rose 0.1% on a like-for-like basis to approximately $4.2 billion. WPP reported a 3% like-for-like revenue increase to $12.05 billion during the first nine months of the year.
The holding company said its business is affected by “grey swans” that are making clients cautious: the Eurozone crisis, tensions in the Middle East, the Chinese economy, and the US economy.
A Burson representative declined to comment on the earnings. Executives from other WPP firms could not be immediately reached for comment.
Note: All figures were converted from British pounds to American dollars using the XE currency exchange calculator.
