Ad supremo warns ISIS and Ebola 'grinding down' business

The world’s biggest advertising group saw a slowdown in revenue growth between July and September
The world’s biggest advertising group saw a slowdown in revenue growth between July and September

WPP founder Sir Martin Sorrell has warned that the Ebola epidemic, the rise of Islamic State and unrest in Hong Kong are "grinding down" confidence among major advertisers.

The world's biggest advertising group saw a slowdown in revenue growth between July and September.

"If you look at the geopolitical risks, they have become more complex," the chief executive said, pointing also to continued "fragility" in the eurozone.

"All that adds up to a lot of uncertainty, which makes clients cautious. These uncertainties grind people down."

Advertising is seen as a bellwether of the economy and Sorrell pointed to weaker results in the past three months from companies such as Procter & Gamble and Unilever.

"They haven't made it with the top line, they've made it by cutting costs," he said, referring to pressure on sales.

He reiterated fears about a UK referendum on leaving the European Union in 2017, saying it is "troublesome" and the risk has moved up the agenda after the Scottish independence vote.

"We're better inside the tent than without," he said. WPP's net sales rose by 3 per cent to £2.76 billion in the three months to September against 4.1 per cent in the first half of the year.

Sorrell expects a further slowdown in the last quarter, which will be "somewhat softer", and maintained "caution" about boosting his 122,000-strong staff, with redundancy  costs rising.

But the WPP boss, the most experienced chief executive in the FTSE 100 after nearly three decades at the top, said the group remains on track to hit full-year profit targets. The UK remained "very strong" despite slowing. The shares were virtually unchanged, missing out on a wider market rally.

WPP, whose agencies include Ogilvy & Mather and J Walter Thompson, led the industry with client wins, picking up £1 billion worth of new billing in the last quarter, including Burger King and Tiffany.

Although WPP and rival Publicis saw a slowdown in the last quarter, America's Omnicom and Interpublic  accelerated.

However, analysts at Jefferies said WPP's organic revenue growth, which includes some client costs, still "led the pack" on 7.6 per cent.

Topics:  advertising business ebola isis

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