WPP posts worst results since the global financial crisis


Advertising agency group WPP has seen almost £1.5bn was wiped off its market value of WPP after it admitted 2017 “was not a pretty year”.


Annual revenues fell 0.9 per cent to £15.2bn, WPP’s worst year in growth terms since 2009.

The world’s biggest advertising firm saw shares plunged as much as 15 per cent as stock markets opened – WPP’s biggest drop since the 1990s – prompting a four-minute trading suspension. They recovered thereafter to end the day around eight per cent lower.

Long investors were also dismayed at the FTSE 100 firm downgrading its future earnings guidance from 10-15 per cent to 5-10 per cent.

Martin Sorrell, CEO at WPP, said in a statement: "The major factors influencing this performance were probably the long-term impact of technological disruption and more the short-term focus of zero-based budgeters, activist investors and private equity than, we believe, the suggested disintermediation of agencies by Google and Facebook or digital competition from consultants,"
Rival agency groups are also suffering, with Omnicom reporting 2017 revenue down 0.9 percent while IPG had a sluggish 2017.

Sorrell added that consumer-packed goods businesses make up a third of WPP's clients. "We have seen pressure on pricing in a low inflationary environment and volumes being under pressure too," he said of the sector. Companies such as Procter & Gamble and Unilever are reducing the number of agencies they work with, while drinks-maker Diageo said it is saving money across media buying and live experience marketing.

WPP's advertising and media investment management function was its strongest-performing sector, including ad agencies J. Walter Thompson and Grey and media agencies Mindshare and MediaCom. Revenue for the function was down 0.1 percent for the year, but up 1.8 percent in the fourth quarter of 2017.

WPP's public relations and public affairs businesses were up 0.7 percent like-for-like in revenue across the year. WPP announced Tuesday that it would merge PR agencies Burson-Marsteller and Cohn & Wolfe but Sorrell denied this was simply a cost-cutting measure.

WPP's Martin Sorrell: Consolidation is 'inevitable' amid pressure from Amazon, Netflix from CNBC.

<< Back to today’s Digital Intelligence news

Copyright ©2000-2018 Digital Strategy Consulting Limited | All rights reserved | This material is for your personal use only | Using this site constitutes acceptance of our user agreement and privacy policy