WPP WPP PLC

By Nathalie Tadena 

Ad blocking technologies haven't yet had a significant impact on the advertising business, said WPP Chief Executive Martin Sorrell.

"Estimates that have been made so far about the impact of ad blocking have been on the smaller side," Mr. Sorrell said on an earnings call with analysts on Monday. "That doesn't mean, by the way, that we can be complacent about it and it doesn't mean it won't become important."

The rise of ad blocking technologies, fueled in part by the release of Apple's new mobile software that allows such apps, is just the latest online advertising headache facing marketers and publishers. Despite all the hand wringing, Mr. Sorrell said Monday that ad blocking concerns so far have been "manageable" and noted that even if ad blocking is successful, the end result will be an increase in the price of content for consumers. Some ad-blocking software developers have experienced pangs of conscience as they consider the negative impact that ad blocking might have on online sites that rely on advertising revenue. Mr. Sorrell noted that the ad blocker app "Peace" was pulled from Apple's app store shortly after being released.

"Advertising does perform a useful economic function -- it reduces the cost of content," Mr. Sorrell said.

While creating "more arresting work" is one way to combat ad blocking concerns, Mr. Sorrell said perhaps the most effective way to address the issue is for "Google to turn off ad blockers invading YouTube."

Issues such as ad blocking and concerns about fraudulent "bot" traffic have added to the complexity that marketers face in a changing digital media landscape. The advertising industry this year has been hit by an unprecedented number of marketers reevaluating their media agency rosters--a "tsunami" of reviews, as Mr. Sorrell put it. WPP, the world's largest ad holding company, is considered by investors to be a bellwether for the health of large companies given WPP's global client list.

"Technology, the use of data and content are critically important in discerning clients' decision after the issues of talent and pricing," Mr. Sorrell said of the media reviews.

Clients conduct reviews of their agencies for several reasons, including a desire to cut back on agency fees and what they pay for media, as well as make sure their agencies are up-to-date on the latest marketing technologies and trends. This focus on costs is the "new normal," as clients face a low growth environment and limited pricing power, Mr. Sorrell said, adding that he has seen "some very aggressive moves" on pricing in this year's round of pitches.

WPP on Monday reported its like-for-like net sales -- a closely watched revenue measure that strips out costs linked to acquiring digital media space as well as currency swings, acquisitions and disposals -- increased 3.3% in the third quarter.

Write to Nathalie Tadena at nathalie.tadena@wsj.com

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(END) Dow Jones Newswires

October 26, 2015 14:33 ET (18:33 GMT)

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