- WPP saw like-for-like organic revenue up 0.3% in Q4, with U.S. performance hindered by cuts from the technology, healthcare and retail sectors, per a preliminary trading statement.
- Like-for-like revenue within the U.S., a key market, dipped 4.5% over the period. Full-year like-for-like organic revenue grew 0.9%, consistent with an updated outlook the ad-holding group shared in October that saw the firm trim growth expectations for 2023.
- Looking ahead, WPP is placing serious investments behind proprietary artificial intelligence (AI) solutions to maintain pace with rivals like Publicis which have fared higher financially. WPP reiterated that it foresees organic revenue growth between 0-1% in 2024.
Account losses, including parts of the Pfizer business, and sharp spending pullbacks from U.S. tech clients threw cold water on WPP’s end-of-year performance. The patchy results further widen the gap between the GroupM owner and a few of its biggest competitors.
Publicis, which can be attempting to capitalize on renewed interest in AI, saw organic revenue jump 6.3% in 2023 and outperformed expectations in Q4, a vital period that features the vacation shopping season. Publicis believes 2024 organic revenue will increase between 4-5%.
There were some brilliant spots for WPP within the U.S., including healthy demand from consumer packaged goods clients. GroupM, the network’s top media agency, had a robust Q4 showing.
But WPP’s specialist shops and inventive agencies had a battering 12 months with the exception of Ogilvy, which “grew thoroughly,” CEO Mark Read said on a call discussing the outcomes with analysts. WPP has tried to streamline some of its agency offerings, including by combining the long-lasting Wunderman Thompson and VMLY&R brands.
Other large agency owners have experienced similar struggles as clients tighten their belts and focus more on performance and data-driven strategies versus traditional brand constructing. Interpublic Group last 12 months made cuts and enacted organizational shuffles at digital specialists like Huge and R/GA.
Agencies are eyeing 2024 as a possible bounceback 12 months as some economic pressures ease and events just like the Summer Olympics, UEFA Euro 2024 soccer championship and busy election cycles kickstart more ad spending. Generative AI can be top of mind, promising to reshape — and potentially disrupt — several features of the business within the wake of ChatGPT’s ascendance.
WPP in January said it will commit 250 million kilos, or about $318 million, annually to drive AI transformation. AI could help boost WPP’s performance through licensing, assisting with client projects and improving internal operations, executives have argued. WPP last 12 months struck a pact with chipmaker Nvidia around constructing a content engine powered by generative AI, raising the query of whether creative jobs might be affected.
“It can augment, not replace, roles, to make people more productive, and we’ll see the AI-augmented work is driving higher [return on investment] for our clients,” said Read on the analyst call.
Another potential problem for agencies is that if other offerings outpace their very own capabilities with generative AI. WPP released its earnings around previews for OpenAI’s Sora tool that may quickly produce complex videos based on tech prompts, and investors asked Read in regards to the potential impact on WPP.
“I don’t think it changes our strategy … I believe it reinforces what we’re doing,” said Read. “What clients need is figure that’s copyright-proof, that [is] in a position to accurately represent their brands and reality. And Sora shouldn’t be yet at that stage.”
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