Good Quarter for WPP Despite DIM Decline

WPP has reported like-for-like revenue up 4.6% for Q3 2015. The insight division, known as 'Data Investment Management', was among those 'improving versus the second quarter' but once again was the only one to report a slight decline in revenue.

Group reported revenue was up 5.9% at £2.927bn, and constant currency revenue up 7.9%. Net sales, which the group says is perhaps a more accurate reflection of performance in this sector, rose 6.1% at constant currency or 3.3% like-for-like. Acquisitions added 3.3% to revenue in the quarter, and 2.8% to net sales.

Revenue for the nine months was up 6.9% at constant currency or 4.8% like-for-like, with a reported figure of £8.766bn (net sales up 5.2% / 2.6% respectively). Profits and margins improved during the quarter and the nine months, rising by 0.3 - 0.5 margin points.

The group said the third quarter saw constant currency revenue growth in all regions - led by North America with constant currency revenue growth of 8.2% and like-for-like growth of 6.8%, and with Asia Pacific's share slightly decreasing versus Q3 2014; and in all business sectors - although the stats show the Data Investment Management division (previously Insight) declining by 1.1% in revenue terms in the quarter and flat in terms of net sales.

DIM has reported declines throughout 2015 to date, and in Q3 represented 19.9% of group revenue, versus 21.3% a year previously, although in net sales the decline is smaller (17.5% to 17.1%). On a constant currency basis - ie without excluding acquisitions - DIM revenue grew 3.8% in Q3. Look at DIM region by region the two largest, North America and Western Continental Europe, 'showed some improvement compared with quarter two, offset by lower growth in the United Kingdom and Asia Pacific'.

WPP says investment in DIM - 'including data analytics and the application of new technology' - remains one of its long-term strategies as it targets higher growth than competitors. Specifically, the Group points to a rise in the share of DIM revenue from digital media, but notes growing client concern around what has been described as 'the three 'v's, value, viewability and validation, particularly in relation to on-line video' - in line with recent public statements by CEO Sir Martin Sorrell (pictured). It adds: 'There is also client concern with the unequal measurement standards between off-line and on-line media, along with concern over the possible understated impact of 'bots'. We remain committed to the highest standards of clarity and transparency'.

As usual WPP expects a boost from the cycle of major events, with the 'visually stunning Rio Olympics and Paralympics' coming up in 2016, plus 'the less visually stunning United States Presidential Election and the UEFA EURO 2016 Football Championships'. It notes that, 'Historically, these events have boosted advertising and marketing services investment by around 1%'.

2015 targets remain similar: Like-for-like net sales growth of over 3.0%, 'despite a worldwide softening in the GDP growth rate', and 'operating margin to net sales improvement of 0.3 margin points on a constant currency basis'.

Full details are at www.wppinvestor.com .