Ad group WPP trails rivals with decline in organic revenue
Reuters
Published Apr 25, 2024 07:11
Updated Apr 25, 2024 10:16
By Paul Sandle
LONDON (Reuters) -Britain's WPP (LON: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 (NYSE:PFE).
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.
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Written By: Reuters
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