By Kate Holton
LONDON (Reuters) - Britain's WPP (L:WPP), the world's biggest advertising company, enjoyed a solid first three months to the year after it outperformed rivals in securing a wave of contracts up for grabs in the United States.
An unprecedented number of U.S. blue-chip companies have put their contracts up for review in the past year, re-thinking which agencies they want for marketing advice and trying to drive down the prices they pay.
Nicknamed "reviewageddon", analysts estimate that more than $25 billion (17 billion pounds) in spending on advertising was put up for review in 2015, a record for the industry which grew up from the 1920s on the New York street of Madison Avenue.
In the first quarter of 2016, WPP's agencies either won or retained contracts from fast food chain Wendy's, e-commerce company Jet.com and retailer Target in North America.
Data from research company Recma and cited by WPP in presenting its results on Thursday showed the firm had either won or retained the most contracts put out for review by blue chip firms which are generally in a cautious mood at the moment.
While U.S. rivals Omnicom (N:OMC) and Interpublic (N:IPG) also gained new work, the Paris-based Publicis (PA:PUBP) appeared to suffer the most according to the data.
"We've been the best performing agency," WPP's high-profile chief executive Martin Sorrell told Reuters. "This tsunami has happened over the last year, it's starting to ease but it's still there."
According to the Recma graph, WPP won or retained nearly $7 billion of work during the wave of reviews, while Publicis lost more than $3 billion. The rest of the spoils were shared between Omnicom, Interpublic and Dentsu.
The strong performance helped WPP to report first-quarter like-for-like net sales growth of 3.2 percent, in line with forecasts and putting it on track for its full-year target.
It shares slipped 2 percent in early trading after it failed to beat forecasts, as some of its rivals have done. The wider FTSE 100 was also more than 1 percent lower on Thursday.
SOLID PERFORMANCE
The update from WPP echoed similar performances from its rivals which have reported solid trading due to buoyant demand in North America, where events such as the U.S. presidential election plus business connected to the Olympic games in Brazil have boosted demand.
Despite the review setback for Publicis, Brian Wieser, an analyst at Pivotal Research Group, said its numbers had been boosted by revenue from clients who have already announced plans to change agencies, but who have not yet completed the transition.
Its results were also helped by an improving performance from its digital business Sapient.
Analysts said the growth at WPP had been driven by North America, which makes up 39 percent of revenue.
"Advertising is a cyclical industry but at the moment conditions in most of WPP's markets are good," said Charlie Huggins, equity analyst at Hargreaves Lansdown (LON:HRGV).
"The company has done an excellent job of controlling costs which has seen margins progressively expand over recent years. As long as the global economy behaves itself, WPP should be capable of strong growth."
In the first quarter, WPP secured net new business of $1.8 billion, compared with the $1 billion it signed in the first three months of the previous year, helping it to top net new business league tables generally, it said.
London-based WPP said over 38 percent of its revenue now came from direct, digital and interactive work, edging it nearer to its target of 40-45 percent sales in the next five years.