WPP remained stuck in the mire in 2017 Q3 with reported revenue up just 1.1 per cent at £3.649bn, O.8 per cent in dollars and down 4.2 per cent in euros. In constant currencies revenue fell 0.4 per cent with like-for-like revenue down two per cent.
Third quarter constant currency net sales, WPP’s version of organic growth, rose just 0.9 per cent with like-for-like sales down 1.1 per cent. Over the first nine months of the year like-for-like net sales were down 0.7 per cent.
Advertising and media buying made the biggest contribution with the UK the strongest region, helped by currency movements. The US was broadly flat.
Against its big competitors Omnicom, Publicis and Interpublic, WPP is faring worse than Omnicom, marginally worse than Publicis and about on a par with IPG. WPP’s shares have already fallen about 30 per cent cent this year and these numbers won’t help them. It’s turning out to be the worst year for WPP in share price terms since the financial crisis of 2008.
WPP is so big these days it’s bound to reflect the wider advertising and media market, which is growing patchily. The worrying thing for CEO Sir Martin Sorrell (below) is that this low growth is being compounded by left field competition from the likes of the consultants’ digital operations (Accenture Interactive is now the biggest digital agency in the world with WPP’s combined efforts (now over 40 per cent of revenue) no bigger than IBM, PwC and Deloitte.
FMCG clients are busy cutting budgets – although their growth has slowed too – and developments like Unilever’s 30-strong U-studios network, formed with on-site agency specialist Oliver, are more bad news. Such agencies will find it hard to replicate everything a traditional agency does but they’ll be cheaper – and you rarely get fired for saving money.
Sorrell said recently that WPP was “recovering its footing – we’re integrating more effectively,” his fabled horizontality. If this level of performance continues into the crucial Thanksgiving/Christmas fourth quarter some more radical surgery may be required.