WPP records first growth since 2017

Although specialist agencies continue to struggle, wins such as eBay have powered the holding co's return to growth.
WPP_rebrand_Office_3X2

Even though organic growth at WPP in Q3 was small, it is enough for its CEO to feel encouraged about the impact its strategic simplification will have on its performance.

The holding company reported a 3.7% year-over-year growth in revenue during Q3, with organic growth at 0.5% (organic growth was 0.7% when including the entire operations of Kantar, which WPP voted to sell 60% of its stake in earlier this year. The transaction was approved by shareholders on Thursday). Organic growth for WPP has fallen by 1.5% for the year-to-date.

While 0.5% is only slight growth, it is the first time WPP has grown since 2017, and follows significant declines in the first two quarters of 2019. Mark Read, CEO of WPP, described the growth as “encouraging” and an “important step” in its plan to reduce and simplify its operations.

While results were positive in most regions for WPP, North America organic growth was down 3.5% in North America, and currently sits at a 6.1% decline for the year-to-date.

The holding company’s global integrated agencies division – which includes most of its major creative and media agencies – posted 1.7% organic growth, largely due to no longer feeling the impact of previous client losses and improving retention with existing clients. Read pointed specifically to recently merged Wunderman Thompson and VMLY&R, as well as Grey, as particularly strong performers during an analyst call. On the other hand, organic growth within the PR division fell by 0.9% in Q3, with specialist agencies being hit particularly hard and posting a 3.4% decline.

Wins for its media investment arm, GroupM, in Q3 include MediaCom winning media duties for eBay in North America and China (estimated to be worth $250 million in billings). The effects of some earlier losses, such as major portions of the Ford creative account leaving GTB last year, have yet to be felt, however. Read cautioned analysts that full-year guidance for WPP would remain unchanged, as it didn’t “want to be declaring victory in Q3 to declare defeat in Q4.”

WPP’s GroupM includes agencies MediaCom, Mindshare, Wavemaker and Essence. It also holds a minority stake in independent agency Kinetic.