WPP sees a tough environment for the rest of this year and next, and as a result has lowered its forecast for 2012 from anticipated 4% growth to 3.5%.
In its mid-year spending report, the holding company says a cyclical spending downturn related to the absence of Olympic games and U.S. elections is a contributing factor, though not the only one. Others include flat global GDP growth, sluggishness in Western European economies, and a rising client insistence on efficiency and value. On the bright side, WPP hailed ad demand in UK and EMEA, and said digital investments and acquisitions continue to drive growth in its business.
WSJ breaks down the picture (sub required), including poor growth in the U.S. where it was hurt by "a 0.6% fall in the country's second-quarter like-for-like revenue on slow spending by its customers, particularly in healthcare, call center and public affairs businesses."
Pivotal Research analyst Bryan Weiser sees another bright spot in GroupM, WPP's media investment arm. He wrote in a research note today, "The company’s media agency business GroupM was a positive offset, posting 12% growth at margins which we believe are much higher than the company’s average levels. This growth is largely reflected in the company’s reported net new billings (most of which are attributable to media), which totaled £2.475 billion for the half and £1.316 billion for the quarter."