WPP has reported year-on-year revenue increase of 3% in the third quarter to £1.72bn - lower than the firm's original expectations - and has admitted that the deepening financial crisis has hit its businesses in the UK and the US.

The world's second largest marketing services group is a bellwether for the health of the UK advertising industry, and said that 2009 will be a "very tough year" with no real recovery expected until 2010.

The group said today that "like-for-like growth across the [third] quarter was similar in all three months, although below original expectations".

Sir Martin Sorrell's company admitted that a number of targets were under pressure but that "everything will be done to try to achieve our improved operating margin target of 15.5% for 2008, although attaining this will not be easy".

WPP said that the group had benefited from the strong euro and the US dollar against the pound but that the "Beijing bounce" after the Olympics "did not materialise to the extent forecast".

The UK saw "some softening" with constant currency growth of 2.9% year on year in the third quarter, compared with 4.6% growth in the first half of the year.

North America was WPP's weakest region with revenues flat in the third quarter, compared with fist half growth of 6%.

"Overall the second, more severe leg of the financial crisis, which started a few months ago, has had the most impact on the communications services markets of the US and the UK," the company said in a trading statement today.

WPP said that the emerging markets of Asia Pacific, Latin America, Africa and the Middle East "continued to grow strongly" in the third quarter with revenues up 16.5% year on year - only slightly lower than the growth rate in the first half of this year.

Continental Europe grew at 7.2% in the third quarter, compared with 4.8% in the first half, reflecting a "counter-cyclical strengthening" in western continental Europe.

The growth region of central and eastern Europe saw revenues rise 16.3%.

WPP said that an analysis of the results by communications sector saw "more balanced" growth.

Advertising, media buying and public relations showed the strongest growth with revenues up over 7% in the third quarter.

Branding and identity, healthcare and specialist communications were up 4.4%.

Information, insight and consultancy were up 4%.

Brokers Numis had expected WPP as a business to report a growth rate of about 4.5% for the third quarter.

WPP's revenues for the first nine months of the year were up 3.8% on a like-for-like basis to just over £5bn.

WPP's share price has fallen by 2.63% in trading today, down by 8.75p to 323.75p at 9.35am.

Paul Richards, a Numis analyst, said: "The disappointment this morning is on margins, which are flat after nine months after having been up +0.5% in the first half year.

An analyst note from Collins Stewart said that WPP looked "likely to miss" its margin target and the marketing service group's organic growth rate for the third quarter and the first nine months lagged that of rivals Publicis and Omnicom.

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