'Hand-to-Hand Combat' in Advertising Market: WPP CEO

Sorrell Blasts Washington for 'Fiddling While Rome Burns'
Eric Piermont | AFP | Getty Images

The CEO of the world's biggest advertising firm has warned the industry is facing sluggish growth and the firm is fighting a daily battle in the face of U.S. spending cuts and Europe's slowdown.

"The conditions that we face are rather difficult," Martin Sorrell, CEO of WPP told, CNBC Friday. "I'm not proud of organic growth of 2-3 percent. I'd like to see it higher. And it is hand-to-hand combat in the trenches in a sense in terms of what we're doing."

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WPP's organic revenue grew by just 2.1 percent in the first quarter. The firm said profits and operating margin were ahead of forecasts and better than the previous year's numbers. WPP also said it would maintain its 2013 outlook for revenue growth of 3 percent.

But Sorrell said the firm faced a constant balancing act between headcount and revenues, and it was currently trimming back on investments it made last year.

"I hope again this year we'll post record results, no forecasts but I hope we will," he said, adding that digital advertising is where the growth is.

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"Western Europe is where it's tougher, the U.S. is in the balance. The sequester has certainly slowed GNP (gross national product) growth in the first couple of quarters in the United States. It is having an impact. But we'll see more growth coming out of the U.S. in due course."

Globally, ad spending in 2012 increased by just 3.2 percent year-on-year to $557 billion, according to research firm Nielsen, which said all regions except Europe had increased their spending.

(Read More: Sorrell Blasts Washington for 'Fiddling While Rome Burns')

"Deep cuts to ad budgets continued in Europe, fueling a 5.3 percent decrease for the final quarter, yielding an annual decrease of 4.2 percent. Even economic powerhouse Germany reported a 1 percent dip in the fourth quarter, the second consecutive quarter the country reported a decline in advertising spend," Nielsen said in the report.

By CNBC.com's Matt Clinch; Follow him on Twitter @mattclinch81