WPP, the world's largest advertising firm by sales, lifted its outlook for the year after a strong performance from the United States and traditional media resulted in solid growth in the first seven months.
Shares in the Martin Sorrell-led group fell 3.4 per cent in early trading, however, after strong performances from rivals had pushed up expectations ahead of the update.
Omnicom Group reported forecast-beating quarterly results in July and said major clients were back on the spending offensive, while Publicis also posted strong results and raised its outlook.
WPP also said it was still seeing caution from major companies due to uncertainty in Europe around the impact of austerity measures, fiscal contagion from Greece, Portugal, Spain and Ireland and concerns over U.S. growth.
"We're seeing a continual improvement but there are still concerns in Europe and the U.S.," Mr Sorrell told reporters today. "CEOs are hesitant to over-promise. There is a generally cautious tone. But it's moving in the right direction."
WPP, whose clients include Vodafone and Unilever, posted a 3.1 per cent rise in key organic revenue for the first seven months and said it could beat this over the full year as trends continue to improve.
It had previously forecast a full-year target of 2 per cent.
It posted first-half like-for-like revenue up 2.5 per cent, towards the lower end of forecasts from a Reuters poll with a range of 2.5 to 3 per cent, but said it had enjoyed a strong July.
It raised its dividend by 15 per cent and said it would target a level of diluted headline earnings per share in 2010 similar to the level achieved in 2008, the previous all-time high.
The firm said organic sales in the first half were boosted by "remarkably strong growth" in the United States, an improved performance in Britain and strong growth in southeast Asia.
The June-July soccer World Cup boosted Africa and Brazil, helping July to the strongest growth of all, up almost 7 percent.
"In our 25 years of existence, we cannot remember a more speedy recovery or turnaround of a region," the group said, on the stronger than anticipated recovery in the United States.
WPP, whose ad agencies include JWT and Ogilvy & Mather, said in June the United States and southeast Asia had driven good growth in the first quarter and expectations rose further after improved first-half performances from rivals.
Major advertisers Procter & Gamble and Unilever have also increased their marketing budgets in recent weeks and broadcasters and media conglomerates such as News Corp and Time Warner have reported seeing a recovery in ad sales.
WPP posted first half revenues of £4.4 billion.
Reuters