WPP takes a first quarter beating in North America

What’s happening in North America? Trump, obviously, but the Donald was supposed to boost business including advertising, marketing and media.

But WPP’s Q1 2017 results, behind target with like-for-like revenue up 0.2 per cent on the same period in 2016 and net sales (its preferred measure of organic growth) up 0.8 per cent indicate, as have others in the sector, a sharp slowdown in North America, the biggest market for the most of the marcoms giants.

In North America like-for-like revenue and net sales growth were down sharply, three per cent and 1.1 per cent respectively. Creative advertising and media, still WPP’s two biggest activities, suffered particularly.

North America was also an area of weakness for Omnicom, the best performing of the marcoms companies in Q1. Omnicom’s overall organic growth was 4.4 per cent, Interpublic posted 2.7 per cent, Publicis Groupe was down 1.2 per cent with Havas flatlining at 0.1 per cent.

So why the big slowdown in North America, 39 per cent of WPP’s business (more for Omnicom and IPG)?

Is it a consequence of the Association of National Advertisers (ANA) report into media transparency (or the lack of it)? Or a sign that the desire of big advertisers, including Procter & Gamble and Unilever, to cut their marketing budgets is making an impact? Or does the worldwide flight to digital mean that agencies are just making less money as their more profitable sectors – TV in particular – lose ground?

Read Also:   Adam&eveDDB tries extra cheese for Mars' Temptations

Probably a combination of all three plus the uncertainty occasioned by Trump’s presidency (he seems unable to persuade his Republican Party to support many of his plans) inhibiting investment by the US business community.

North America, the US in particular, has immense powers of recovery but these numbers are a worry for all the marcoms groups. The UK (still in pre-Brexit mode of course) and Europe performed strongly. It’s an irony that the UK is leaving the EU just when European economies are picking up.

WPP is hardly on its uppers with reported Q1 billings of £13bn (up nine per cent, helped by currencies) and revenue up 16.9 per cent at £3.6bn. It’s still spending strongly on acquisitions net debt in the first quarter up a chunky £453m, £150m of which was acquired in the merger with Australia’s biggest agency group STW.

But WPP’s usually ebullient CEO Sir Martin Sorrell (above) is going to need to answer some tough questions from shareholders about where significant growth is going to come from despite promising that WPP’s new business pipeline is performing again. As well, of course, as the bothersome question of who, one of these days, will succeed him at the helm.

All the WPP Q1 numbers are here.

You May Also Like

About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
© Copyright 2013 More About Advertising, All Rights Reserved. With help of WPWarfare.com. | Cookies explained.