WPP , the world's largest advertising group, expects to feel the impact of the economic slowdown in 2012, it warned Wednesday as it reported strong first half results bolstered by emerging markets and digital.

The firm, led by Martin Sorrell, said its 2011 organic revenue growth may drift down slightly from its recently upgraded forecast, but said operating margins may improve further, leaving it pleased overall with the performance.

Shares in the group were up 3.5 percent, against a flat FTSE 100 Index, after they fell heavily in the run up to results over growing fears about the health of the global economy.

People are investing in their brand, Sorrell told Reuters. Most of our clients work on a calendar year basis, so we have to watch what happens in 2012. And 2013 will be the acid test.

Some of the forecasts for 2012 look a bit conservative, but frankly everyone is so frightened at the moment that it's understandable.

WPP, whose ad agencies include JWT and Ogilvy & Mather, upgraded its 2011 outlook in April after it outperformed peers in the first quarter.

Since then however the shares have fallen around 25 percent in the last 7 weeks, underperforming the FTSE 100 Index by 11 percent, as investors feared that the sluggish economy in the United States and eurozone debt crisis would hit corporate spending.

Many analysts said the sell off had been overdone, especially for a company that has proved itself to be quick to adapt in recent years, and Wednesday's results showed the firm again performing solidly.

We're trading at five times EBITDA, that can't be right, Sorrell said.

IMPROVED OUTLOOK

Like-for-like sales were up 6.1 percent in the first half of the year, and up 5.9 percent for the first 7 months, putting it slightly below its recently upgraded annual forecast of at least 6 percent growth.

The operating margin was up 0.7 of a percentage point in the first half and said the performance indicated further possible operating margin improvement beyond that.

Analysts welcomed the comments, after they had noted with caution the shrinking margins reported by rival Publicis in July as costs increased due to higher salaries.

WPP continues to tick the boxes through a combination of generally strong growth and conservative planning, said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

Whilst the company is preparing for a challenging 2012, events such as the Olympics and the U.S. Presidential elections may provide further opportunities for growth.

WPP said on Wednesday that any slowdown in the United States was likely to be balanced by faster growth in Britain, western continental Europe, and faster growth in Asia Pacific, Latin America, Africa and the Middle East, and central and eastern Europe.

In summary, so far so good in 2011, with forecasts in reasonable heart, but there are storm clouds and we still have to see how the latest stock market crisis affects consumer and client thinking and actions, the group said.

Any impact may not be felt until 2012. Plans, budgets for 2012 and forecasts will, therefore, be made on a conservative basis.

Analysts at Numis said the results were broadly in line with forecasts and said now was a good time to buy.

The group's shares have been derated heavily to a 2012 price to earnings of 8 times from fears over global growth. However we believe the group will benefit increasingly from its excellent emerging market and digital exposure and think they offer good value.

(Reporting by Kate Holton; Editing by David Jones)

Emerging markets Advertising Ftse Elections