Advertising giant WPP has released its Q4 and full year 2023 results.
The London-listed company reported full-year revenue of £14.8 billion, an increase of 3.2% compared with 2022. Its less pass-through costs also rose by 0.9% to £11.8 billion. However, pre-tax profits for the year tumbled to £364 million from £1.16 billion in 2022.
The company, which counts Google, Adobe, Meta and Microsoft among its customers, reported a decline in earnings in North America. The region’s revenue fell by 2.7% in 2023, due to lower spending by customers in the technology, healthcare and retail sectors. In Q4, it also experienced a 4.1% decline. The group experienced strong year-on-year growth in the U.K. and India, where it recorded an increase of 5.6% and 7.7%, respectively.
Advertising spend in the retail sector dropped 11.3%, while tech and digital services saw a 6.9% fall. The decline is significant, as revenues from big tech account for approximately 17.5% of WPP’s total business. The CPG side was solid, with revenue growth of 14.2% for what constitutes 27% of the business. Financial services increased by 4.3%, as did telecom, media and entertainment (2.9%), automotive (1.3%), and healthcare and pharma (0.6%).
The slowdown in technology ad spending affected WPP’s integrated creative agencies, such as VML (formerly VMLY&R and Wunderman Thompson) and AKQA, which reported a 3.4% drop in the year, according to the company. WPP’s media business, however, grew, with GroupM revenues up 4.9%.
WPP expects its revenues to remain constant or increase by up to 1% year-on-year. The business remains confident that the restructuring it has been doing to its advertising brands to save costs, as well as its bet on AI, would benefit its revenues this year.
“AI will be fundamental for our business and we are embracing the opportunities that it presents, putting it at the heart of our operations and our work for clients,” said WPP chief executive officer Mark Read. “Our AI-powered platform, WPP Open, is now being used by more than 30,000 people across WPP with growing adoption by our clients.”
“While 2023 was more challenging than we expected due to cuts in spending by technology clients, we delivered a resilient performance for the year with 0.9% like-for-like growth and a 0.2 point improvement in our headline operating margin at constant currency,” Read added. “This was driven by disciplined cost control, while continuing to invest in AI, data and technology.”
For context, WPP wasn’t that far off some of its competitors earnings: Publicis Groupe, posted a 6.3% increase in full-year revenue, while Omnicom registered a 4.4% year-on-year increase.
