Creative fares better than media in Q2 for WPP

A 15.1% drop puts the holding co. somewhere in the middle when it comes to performance among the major networks.
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WPP is the last of the major holding companies to report its results for Q2, the first quarter that fully encompassed the COVID-19 pandemic. With an overall 15.1% drop in net sales, the impact was felt more by the group’s media business – which includes GroupM shops Wavemaker, Mindshare, MediaCom, Essence and others – than creative for the period ended June 30.

North America was the least impacted region, with revenue down 10.2%. The U.K., on the other hand, felt the most severe effects at a 23.3% drop. The rest of Western Europe fell by 18.8%, while the Rest of World was down 14.8%.

GroupM “underperformed” because of what the company called “the closer correlation of its revenue to client media expenditure.” Globally, ad spend is expected to dip overall anywhere from 9.1% (according to Zenith) to 11.9% (according to GroupM). Canada, says GroupM, could see a more moderate decrease at 5.1%.

When announcing the group’s results, CEO Mark Read said the overall decline was “better than our expectations,” although other groups saw less stark drops. IPG had the least drastic fall, down 9.9%, and Publicis Groupe also beat its own expectations by declining 13%. However, Havas declined 18.3%, and Dentsu Aegis and Omnicom both fell upwards of 20%.

Throughout the first half of the year, total workforce declined by nearly 5% – roughly 5,000 cuts. Read describes this as “a combination of voluntary leaves whose roles were not replaced as part of the hiring freeze, and redundancies.” He added that it is attempting to preserve its workforce as much as possible. The estimated value of the staff cuts in terms of cost was 5%. It also cut travel and discretionary expenditures by 47% and property costs by 5%.

Most of the company’s global offices continue to operate below capacity, with the only offices seeing a significant return to work being in China (77%). By comparison, the U.S. is only at 3% and India remains at 0%.

The company expects to see some recovery in its performance going forward; it noted that in July, revenues were down by 9.2% year-over-year, indicating an upward trend. Read said that, assuming there are no more major lockdowns, it’s unlikely any other quarter will match the second in terms of difficulties. Although, he added, “We remain cautious on the speed of recovery.”