WPP, one of the world’s largest advertising and marketing groups, has reported a return to net sales growth in its third quarter. The company announced a slight increase of 0.5% in like-for-like revenues, excluding pass-through costs, amounting to £2.8 billion. This growth reflects resilience in some markets, yet lingering economic uncertainties and a challenging close to the year remain pressing concerns.
Mixed regional performance: US and Europe vs. China
The advertising giant’s performance saw positive growth in the US and Western Europe. However, this success was counterbalanced by a significant drop in China, where revenues fell by over 20%. The decline in China is attributed to client losses and ongoing macroeconomic challenges impacting both its media and creative sectors.
UK revenues remained stagnant during the quarter, as consumers appeared cautious ahead of an anticipated UK Budget that is expected to include tax increases. WPP’s Chief Executive, Mark Read, highlighted this cautious consumer behavior, pointing out that “people are expecting tougher times ahead financially.” Read expressed optimism that clarity on the Budget would provide much-needed stability for marketing activity.
Despite the modest increase in third-quarter sales, WPP maintained a cautious outlook for the full year, forecasting that like-for-like revenues would either remain flat or dip by 1%.
GroupM gains, creative agencies decline
WPP’s media investment arm, GroupM, saw a 4.8% rise in like-for-like revenues, while its integrated creative agencies faced a 3.1% decline. Key client sectors like consumer goods, automotive, and financial services showed solid growth, and the struggling technology sector stabilized. The company secured major new business, including media partnerships with Amazon and Unilever, creative work with Starbucks in the US, and a media deal with Honor in China.
Strategic moves
WPP has been investing heavily in AI through its WPP Open platform, which aims to streamline marketing operations. CEO Mark Read noted that the platform’s usage has more than doubled this year, helping improve efficiency and creativity in delivering campaigns.
WPP is also moving forward with plans to offload its majority stake in corporate public relations firm FGS Global to private equity group KKR. This sale is on track to close in the fourth quarter, with expected net proceeds of approximately £604 million. In another significant move, WPP and its partner Bain Capital are exploring the sale of Kantar Media, a division that handles TV audience measurement in the UK, with interest reportedly coming from multiple private equity firms.
