Advertising agencies are often an early barometer of economic trends. Industry leaders WPP WPPGY -0.67% PLC and Publicis Groupe SA PUB.FR +1.65% have been feeling the pain from companies cutting back on spending, particularly in Europe, as recession bites across much of the region.
But even though Europe remains a thorn, signs that consumer confidence is returning in the U.S.—the world's largest ad market—and some small improvements in the euro zone have started to crystalize, ad executives said.
"The mood here is very positive," said Miles Young, chief executive of Ogilvy & Mather Worldwide, one of the largest advertising networks owned by WPP.
Much of the industry's enthusiasm also stems from its rush into digital advertising. Some of the world's largest advertisers, such as Unilever NV, UN +1.40% are investing in boosting their digital campaigns or testing the numerous new technologies available within the digital-ad world, led by a medium that remains still largely unexplored: mobile ads.
"For creativity, there couldn't be a better time. You have to make sure you do this well," said Unilever Chief Marketing Officer Keith Weed.
Ad forecaster Zenith Optimedia, a unit of Publicis, predicted that digital ads would be the key engine of growth when ad markets recover next year and in 2015, just as it helped stem some of the sharp revenue losses at the depths of the financial crisis in 2009.
When organic revenue fell 6.5% at Publicis and 8.1% at WPP during the crisis, there were no Champagne parties on rooftops in Cannes. But that has changed.
There was little evidence of a crisis along the shore during the festival. Attendance surged at least 9%12,000 this year, award entries reached record levels and the Cannes beach was filled with lavish parties all week. Rapper P Diddy and the Franz Ferdinand band were among the star attractions."Everyone is starting to see some recovery, even though it isn't as much as one would like to," said Michael Roth, chief executive of New York-based Interpublic Group IPG +1.05% of Cos.
Mr. Roth said his company saw good growth in European markets such as Germany, the U.K. and the Netherlands, though Southern Europe remained tough. Europe has probably hit a "low point," Mr. Roth said.
While meaningful growth was still nowhere in sight, recent data indicate that the euro-zone economy finally could be emerging from its longest postwar recession. The hope among many Europeans was that stronger global demand would spur growth in export-sensitive Germany, which accounts for around 30% of the euro zone's gross domestic product. That, in turn, could boost exports from its European neighbors and provide an overall boost to business confidence.
While highlighting that Southern and Western Europe were still very tough markets, WPP Chief Executive Martin Sorrell pointed to signs that matters were "a little bit better" in Spain, following recent policies put in place by the government.
The slightly more upbeat tone in Cannes has yet to translate into numbers for the ad market. Publicis's and IPG's ad forecasting units slightly lowered their forecasts for global ad spending, mainly to reflect the continuing recession in the euro-zone.
Ad executives said their clients were still cautious. "It's not a toothache anymore but still this permanent migraine in the background," said Mr. Young, of Ogilvy & Mather.
Still, top executives increasingly signaled that there are better times ahead.
Publicis CEO Maurice Levy raised his full-year targets slightly on Friday. Publicis probably will reach organic revenue growth, which strips out acquisitions and currency fluctuations, of around 3.5% to 3.6% for the full year, he said, the high end of the 3.2%-to-3.6% range Mr. Levy set earlier this year, mainly thanks to stronger growth in the U.S. and digital.
Mr. Levy said growth was "better than expected" in April and that second-quarter growth would be above the 1.3% posted in the first three months, with a gradual improvement over the coming quarters.
WPP recently said revenue trends had improved over the past two months, with a particular increase in growth in April.
