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WPP Plc, the worlds largest advertising agency, raised its guidance for the year in a sign of resilient demand for services even amid an economic downturn.

Adjusted sales will rise 6% to 7% this year, the London-based group said in a statement on Friday. That compared to its previous forecast of 5.5% to 6.5%. 

Analysts and investors have been watching for signs of how advertising will hold up as global growth slows and inflation spikes. The company said that demand is still robust, particularly from clients in the technology and health-care industries, with the exception of the Chinese market where lockdowns have hurt its sales outlook for the year. 

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We have enjoyed a strong first half, with broad-based growth across our creative, media and public relations businesses, Chief Executive Officer Mark Read said. This reflects the improved competitive position of our creative businesses, with their growing capabilities in commerce, experience and technology, our continued strength in media and the resurgence in demand for strategic communications advice from our public relations agencies.

The company adjusts its revenue numbers to exclude pass-through costs, fees that are passed on to clients from external suppliers. 

Key Insights

  • Adjusted sales excluding pass-through-costs rose more than 12% to 5.5 billion pounds ($6.7 billion) in the first half of the year.
  • Demand for data and technology-led projects could help WPP overcome client pullback from traditional ad campaigns in the second half of the year, Bloomberg Industry analyst Matthew Bloxham said.
  • Rivals have been resilient so far.

    Publicis Groupe SA reported better-than-expected earnings in the second-quarter and raised its guidance for the year in a report last month.

    Omnicom Group Inc. also raised its sales growth forecast.

  • WPP

    acquired Latin American e-commerce agency Corebiz last month without disclosing terms. It also

    bought Australian marketing technology services agency Bower House Digital in June.

Market Context

  • WPP rose 1.3% to 892.80 pence in London trading on Thursday.
  • Shares have dropped about 20% this year.

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