US election 'key to ads recovery'

SIR Martin Sorrell says the outlook for the global advertising industry, of which his WPP is a major chunk, now rests on 'what happens immediately after the first Tuesday in November'.

'Whether it's the re-election of Bush or, as looks more increasingly possible, the election of Kerry, the debate will be around whether the US economy has a hard or soft landing. It's impossible to judge from here,' he added.

Until then, WPP looks set for a buoyant 2004 boosted by spending on the US Presidential election, the Athens Olympics and, to a lesser extent, football's Euro 2004 championship.

Referring to his analogy of advertising being in a corrugated bath bottom-shaped recession a year ago, Sorrell revised his view to a 'slight danger of showers in 2005'.

The group showed improvement in every quarter of 2003, with revenue for the year up 5% at £4.1bn and headline pre-tax profits 18% better at £473m, against analysts' forecasts of £455 million. Earnings rose 16% to 29p and the dividend goes up 20% to 6.48p.

Sorrell said the group had been led out of the advertising recession by the US, with good signs of growth in Asia and Latin America. The situation in the UK remained 'tough', with many national newspapers not yet back to levels seen in 2000.

The fact that network TV advertising costs around the world are rising faster than inflation means advertisers are likely to prefer alternatives such as cable and satellite TV and outdoor posters.