- WPP saw revenue decline 1.4% year-over-year in Q1, according to expectations, in keeping with an earnings statement.
- Like-for-like (LFL) revenue less pass-through costs, one other measure of growth for the agency network, was down 1.6% YoY. Weakness in China, the tech sector and inventive, in addition to the lack of some major accounts including Pfizer, contributed to the slowdown.
- The group reiterated its full-year guidance of either flat or 1% growth as measured in LFL revenue less pass-through costs. Like its peers, WPP is betting heavily on generative artificial intelligence (AI) to shore up a positioning around innovation.
WPP lagged among the many Big Four ad-holding groups in Q1. The GroupM and Ogilvy owner didn’t profit from a tech rebound that has buoyed rivals because the business was impacted by pullbacks in key markets, continued struggles on the creative front and the lack of some large clients. China revenues dropped 15.4% throughout the quarter while North America was down 5.2%, with the latter’s slide attributed to weak tech spending and the Pfizer account change.
The results were according to the corporate’s expectations and its 2024 guidance stays the identical. But WPP preparing for a 12 months of flat or anemic growth is noteworthy during a period where the ad market is usually on the upswing and competitors are expressing newfound optimism following a fallow 2022-23.
“We remain on target to return to growth within the balance of the 12 months, supported by an encouraging recent business pipeline and the strength of our business creatively and in media, each powered by recent AI capabilities, while our simpler structure will drive organisational flexibility and stronger money conversion,” said WPP CEO Mark Read in an announcement.
Q1 brought some wins to WPP that would bolster the underside line, including recent assignments from AstraZeneca, Molson Coors and Nestlé. Net-new billings in Q1 stood at $800 million, down from $1.5 billion throughout the year-ago period.
Amid a push for cost savings, WPP has again moved to simplify its sprawling global network. In October, it merged creative agencies Wunderman Thompson and VMLY&R to create VML. It began the 12 months by bringing together comms shops BCW and Hill & Knowlton to form Burson and has made efforts to further streamline GroupM, its top media agency. GroupM saw growth up 2.4% in Q1 while integrated creative agencies were down 3.3%.
“Structurally, VML is now well established and is on target to deliver savings. GroupM is progressing well with its simplification and Burson will probably be operational in July” said Read within the earnings report. “I’m very happy with the progress we’re making and we’re already seeing the advantages of an easier and more agile structure for our clients.”
Generative AI can be playing an enormous role in WPP’s transformation strategy, a typical narrative within the agency category. The group earlier in April announced it might integrate Google’s cutting-edge Gemini models into its Open operating system that has been adopted by 50,000 employees. WPP within the announcement credited recent Nestlé media account wins to AI. The company can be working with leading chipmaker Nvidia to develop a creative engine powered by the emergent technology.
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