Media is the strong point for WPP as its declines soften

The holding company feels relatively optimistic about momentum as it picks up new business and media begins to rebound.
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While several of its agencies continue to be vulnerable to client cutbacks and the uncertainty of the pandemic, WPP’s CEO feels the holding company has shown “resilience in a challenging market” as media spend begins to pick back up and its new business pipeline stays strong.

For the three months ending on Sept. 30, WPP’s organic revenue declined by 7.6%, bringing the number to 8.9% for the year-to-date. While a definite reflection of the struggles the holding company is facing during the pandemic, it nearly cuts its decline from the previous quarter in half.

WPP’s global integrated agencies segment – its largest, containing the likes of Ogilvy, VMLY&R, Wunderman Thompson, Grey, GroupM and all of their subsidiaries – had organic revenue fall by 8.6%. However, the company said all of its agencies have begun to show sequential improvement over previous the quarter, with GroupM having the strongest recovery as client media spend begins to pick back up.

Specialist agencies – which includes regional players and dedicated agencies like GTB, and had been under-performing even prior to the pandemic – had organic revenue fall by 12.5%, which WPP attributed to brand consulting and other niche agencies being especially susceptible to pressure from client budget cuts. Organic revenue at WPP’s PR agencies dipped by only 4%, helped by strong demand for strategic communications.

Regionally, WPP’s biggest market was also its best-performing: organic revenue in North America dropped by only 5.1%, roughly in line with the year-to-date decline of 5.8% and an improvement over the 10.2% drop from Q2. That was offset, however, by that fact that its second-biggest market did not fare as well, with organic revenue in Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe dropping by 12.5%.

Despite the ongoing uncertainty of the pandemic, CEO Mark Read was somewhat optimistic about WPP’s resilience going forward, particularly because the company picked up numerous major assignments. The holding company won the global media and creative business for Walgreens and global creative for LG, Mediacom picked up global media duties for Uber, Wavemaker won global media account for Pernod Ricard and Grey won global creative for Carlsberg.

In terms of its current client mix, while the hard-hit automotive segment is its third-largest at 13%, categories like travel and retail are much smaller, with fairly well-insulated sectors like CPG, technology and healthcare making up the most of its business.

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