Marketing services groups such as Publicis and Omnicom are looking to acquisitions to drive growth after the sector’s third-quarter results failed to demonstrate improvement in the advertising markets.

Publicis of France showed the best results among the five large agency groups reporting in the past two weeks, with like-for-like revenues declining 7.4 per cent in the three months to September. At the other extreme, Interpublic, a US-based group, posted organic sales down 14.2 per cent.

Along with Havas and Omnicom, all showed only marginal improvement in the third quarter compared with the second. WPP fared better, reporting on Friday that organic revenues fell 8.7 per cent, “less worse” than the 10.5 per cent drop in the prior quarter.

But Sir Martin Sorrell, chief executive of WPP, remained reluctant to forecast anything more optimistic than a flat performance in 2010. “Some people look at those numbers and say the recession has ended,” he said. “We say the recession doesn’t end unless we see like-for-like growth. Some of the statements that people make in our industry sound like they are running for office.”

Maurice Lévy, chief executive of Publicis, gave the most optimistic outlook, but even he remained cautious. “The trend and all the information we have currently suggests that the worst is behind us. We are not yet with the positive numbers.”

From Sorrell with LUV – Sir Martin spells out shape of an economic recovery

Sir Martin Sorrell, chief executive of WPP, the advertising group, yesterday added to what he called the “alphabet soup debate” on the shape of the recession by branding the recovery “LUV-shaped”.

Sir Martin, who was born on Valentine’s Day 1945, backed a Reuters journalist’s affectionate take on the economic outlook: that western Europe will see an L-shaped recovery, with a happier U in North America and a rapid-recovery V in faster-growing markets such as Brazil, India and China.

Earlier this year Sir Martin referred to an “italic L” recovery, with a “gentle rise” in the latter part of 2009. Last year, he accurately forecast a stock market rally in mid-2009 but admitted in August that WPP did not act quickly enough to cut costs as revenues fell.

Sir Martin confessed in March that the economic forecast for which he is best known – that the 2001-2 downturn would be a “bath-shaped recession” – was not his own original idea.

Sir David Clementi, then deputy governor of the Bank of England, coined the phrase – describing a sharp drop, long plateau and gradual recovery – during an off-record dinner.

“A few days after the dinner I was asked what was the recession like in terms of shape and I attributed it very faithfully to David Clementi,” Sir Martin told the Stationers’ and Newspaper Makers’ Company annual lecture.

But Sir David told him that, as a central banker, he was not keen to be associated with the outlook.

“So I then gave up attributing it to him,” Sir Martin said. “About the only important thing I’ve ever said was about the bath-shaped recession and it had absolutely nothing to do with me whatsoever.”

Anthony de Larrinaga, analyst at Jefferies, said all the agency groups were “bounding along the bottom with very little visibility”.

Contemplating a slow recovery in clients’ spending, advertising executives are steeling themselves for a resurgence in industry consolidation.

Publicis plans to make acquisitions in India and China, although not on the scale of its €369m ($530m) deal to buy Razorfish, a digital agency, from Microsoft.

Omnicom, which saw third-quarter sales drop 10.7 per cent but has historically made fewer acquisitions than its rivals, is also looking to digital and emerging-market dealmaking.

“Given the strength of our balance sheet, I fully expect the company will be more active and you can expect more acquisition activity from us as we move forward,” said John Wren, chief executive. Speculation has also arisen this week about that the long awaited tie-up between Aegis, a UK group providing media-buying and market research services, and Havas.

The two have a common shareholder in Vincent Bolloré, whose family holdings also include electric cars, telecoms and paper.

Havas last week raised €350m in a bond issue it said would help lengthen the maturity of its debt as well as seek “opportunities for growth”. Aegis looks vulnerable in the wake of management changes and a long-running search for a new permanent chief executive, analysts say.

However, Havas’s €650m in cash and undrawn facilities would be insufficient to buy Aegis outright. Analysts speculate that GfK or Ipsos, the European market research groups, could be interested in Synovate, its market research arm, worth an estimated £350m ($575m).

“Aegis is not within Havas’s grasp unless it is raising money from elsewhere,” said Patrick Kirby of Deutsche Bank.