Omnicom more positive on 2013, WPP cautious

BARCELONA Wed Nov 14, 2012 11:38pm IST

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BARCELONA (Reuters) - Omnicom, the biggest ad agency in the United States, said it was feeling "increasingly positive" on the outlook for the advertising market next year, despite a low-growth economy persisting across the globe.

The comments follow an industry-wide advertising slowdown in September which had prompted analysts and investors to be on the hunt for any signs of improvement in the willingness of large corporations to spend on advertising.

While Omnicom said it was increasingly positive for next year, WPP, the world's largest advertising agency, said it was remaining cautious on 2013 even though they had seen some improvement in October from September.

Neither group however went as far as France's Publicis, which said this month that October had bounced back with organic revenue growth of 7 percent.

"It's too early to make a clear prediction," Omnicom Chief Executive John Wren told the Morgan Stanley TMT conference on Wednesday.

"People expect a lower growth environment across the globe, but that isn't a disaster. I am increasingly positive on 2013, especially the latter part. I'm not hearing any horrible, scary things from clients we talk to."

Advertising spending generally tracks economic growth, so slowdowns in world markets tend to have a knock-on effect for ad agencies.

Wren declined to say how much he expected the ad market or Omnicom to grow next year but staffers at his agencies would be in talks in the coming 4-5 weeks with major corporations to determine their ad budgets.

WPP Chief Executive Martin Sorrell said he would remain cautious on the outlook for 2013, because it lacks any major event like an Olympic Games or major election.

"In my view things are quite tough," Sorrell told the same conference. "September was a tough month, it was quite remarkable... it was across the board in the industry.

"In October we did see some recovery. One of our competitors, Publicis, talked about 7 percent in October and... the word that comes to mind is incredible. In all senses of the word.

"The odds are, as we look at 2013 that we have to be cautious. There are no events in 2013."

Omnicom, home to advertising, media and public relations agencies such as BBDO Worldwide, DDB Worldwide, TBWA Worldwide and Fleishman-Hillard, posted organic growth in the third quarter of 3.5 percent.

It outpaced rivals WPP and Publicis, which saw 1.9 percent and 2 percent organic growth respectively in the quarter.

Both Wren and Sorrell cautioned against looking too closely at month-to-month changes in the market and Wren declined to give details of Omnicom's performance in October or how the fourth quarter was progressing.

"We initially thought this year would come in around 3.5-4 percent organic growth, and it will probably end up in that range," he added.

(Editing by James Regan and Mike Nesbit)

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