Ad group WPP trails rivals with decline in organic revenue
5:12 am Thursday, April 25th, 2024
By Paul Sandle
LONDON (Reuters) -Britain’s WPP became a clear laggard among global ad companies with a drop in organic revenue drop in the first quarter, hurt by less spending from tech clients, a downturn in China and the loss of business from Pfizer.
Chief Executive Mark Read said the 1.6% decline was in line with expectations.
“We certainly expect to see growth in the second half,” he said on Thursday. “And we think the second quarter will be a little bit better than the first quarter.”
WPP, which owns the Ogilvy and GroupM agencies, stuck to its guidance of flat to 1% growth this year and a margin improvement of 20-40 basis points.
By contrast, rivals Publicis, Omnicom and IPG reported underlying revenue growth in their latest results. France’s Publicis was the standout, logging better-than-expected 5.3% organic revenue growth.
Shares in WPP were 2.7% lower in early trade.
WPP noted it had lost key Pfizer creative and public relations accounts last year and that there had been a 15.4% organic revenue decline in China “due to a challenging macro and client environment.”
Read said WPP had seen solid revenue growth in its biggest category – consumer packaged goods – with like-for-like growth of 9.5%, adding that companies in this sector recognised that investing in brands to drive volume growth was critical.
Revenue from tech and digital services clients, however, fell 9%.
Procter & Gamble, for example, told analysts on Friday it had increased its marketing spending by about 14% in its most recent quarter. The company is a WPP client although its main agency group is Publicis.
In contrast, Read noted that Meta had talked about a 16% decline in its other expenses including sales and marketing when it reported earnings on Wednesday. That said, Read expects spending by the tech sector to return to growth this year.
(Reporting by Paul Sandle; Editing by Kate Holton, Sarah Young and Edwina Gibbs)
