WPP moved into negative growth territory in Q3 2023, the worst performer so far among the big ad holding companies and one which is bound to lead to questions about its leadership, including CEO Mark Read, now six years into the job.
Q3 revenue was down 1.8% with like-for-like revenue less pass through costs (WPP’s favoured measure of organic growth) down 0.6%. Among its rivals Publicis rose 5.3%, Omnicom 3.3% with Interpublic also down, at -0.4%.
By region, WPP grew (a bit) in UK, Western Europe and the rest of the world offset by declines in North America with continued weakness from technology clients and China where WPP is the subject of a bribery investigation.
Global integrated agencies grew revenue less pass-through costs by 0.1% in Q3 (year to date) +1.5%) with integrated creative agencies declining -1.1% (YTD -0.9%). Media at GroupM grew +1.6% in Q3 (YTD +4.6%) with low-single digit growth in the US and UK.
WPP has revised down its 2023 full year forecast to 0.5-1.0% growth from a hardly buoyant 1.5-3%.
CEO Mark Read says: “In a world being rapidly reshaped, we need to continue to evolve our offer to clients and simplify our business. I am excited by the creation of the world’s largest creative agency, VML, and the continued evolution of GroupM. Both these developments will strengthen our offer to clients, simplify the integration of our services and maximise the returns on our ongoing investments in AI and technology.
“Our top-line performance in Q3 was below our expectations and continued to be impacted by the cautious spending trends we saw in Q2, particularly across technology clients with more impact from this felt in GroupM over the summer than the first half.
“We continue to win both creative and media assignments from leading global companies including significant wins in the third quarter with Estée Lauder (media), Hyatt (creative), Lenovo (creative), Nestlé (media) and Verizon (creative). Our net new business performance of $1.4bn in the quarter showed sequential improvement after a tougher first half.”
Combining Wunderman Thompson into VML may make some difference but there’s no guarantee. GroupM, for years WPP’s strongest performer, is now looking unwieldy with EssenceMediacom (and the mysterious EssenceMediacomX), Mindshare and Wavemaker plus other bits here and there.
Is Read the person to effect more surgery or is it time to give someone else a go? Someone, for example, who would sell off bits of the rambling empire that no longer contribute as they need to. WPP under founder and long-time CEO Sir Martin Sorrell had always been a buyer rather than a seller. But that seems a long time ago now.
WPP shares fell 3% in early trading.