U.S. ad agencies may be worried about economic shortfalls and budget cutbacks in the coming year but international agencies avoided a hit by diversifying.
Today ad giant WPP reported a 14.5% rise in net profits for the first six months of the year, with sales in Asia and Latin America making up for slower growth in Europe and the U.S. The world’s second largest ad agency is moving into digital, with Digital, Internet and Interactive Networks now accounting for 25% of WPP’s business, but the London-based firm’s success this year has been built on diversification and big name events.
WPP has been focusing on emerging markets, purchasing stakes in several Chinese companies as well as India, Vietnam, Russia, the Czech Republic and Kenya so far this year. The firm also made a 1.1 billion-pound hostile bid in July for market researcher Taylor Nelson Sofres Plc in efforts to move away from its dependence on ad revenue.
Income in emerging markets like Asia, Africa, Latin America and the Middle East made up 23 percent of revenue for the first half of the year, with WPP’s net income climbing to $391 million.
But the company’s success this year has been padded by opportunities presented by the U.S. presidential election and the 2008 Olympic games. With no such events on the horizon for 2009, the forecast for next year is not quite so bright.
