WPP’s Q1 results fell in line with the company’s expectations, with performance reflecting “the toughest comparator of the year,” CEO Mark Read said.
The London-listed company reported revenue of £3.4 million, which is an increase of 2.1% compared compared with 2023. Its pass-through costs declined by 1.6% to £2.6 million.
Much of the other news from the earnings report follows the same back-and-forth pattern with mild wins offset by mild declines. WPP saw growth in the U.K. and Western Continental Europe, offset by declines in North America and Asia Pacific. The company also saw strong growth in India offset by a decline in China.
North America revenue declined 5.2% due to a year-on-year reduction in spending from technology clients; the loss of Pfizer’s creative and public relations accounts; and other customer losses at GroupM. The Asia-Pacific region also experienced a 3.2% drop. Although India rose by 6.6%, China reported a 15.4% decline as a result of a difficult macroeconomic and client environment.
Western Continental Europe saw strength in France and Spain offset by a decline in Germany, and Central and Eastern Europe was flat by 0.1%. The group also experienced 0.3% growth in the U.K due to an increase in CPG, offsetting a decline in technology spending by customers. Latin America (2.3%) and the Middle East and Africa (7.8%) reported positive results.
The loss of assignments at a healthcare client and reduced spend at technology companies affected WPP’s integrated creative agencies, such as VML and AKQA, which reported a 3.3% drop in the quarter. WPP’s media business, however, grew, with GroupM revenues up 2.4%.
The lost clients were balanced by some agency wins from AstraZeneca, Canon, Molson Coors, Daiichi Sankyo, Nestlé, Perfetti, Perrigo, Rightmove and Telefónica. All this led Q1 to net new billings of $0.8 billion. In Q1 2023 that total was $1.5 billion.
Advertising spend in the retail sector dropped 9.1%, while tech and digital services saw a 9% fall. Revenues from big tech account for approximately 17.1% of WPP’s total business. The CPG side was solid, with revenue growth of 9.5% for what constitutes 28% of the business. Financial services decreased by 0.9%, while telecom, media and entertainment rose 6.8%. Automotive (0.7%), and healthcare and pharma (8.2%) saw declines.
WPP is also reporting successful AI initiatives.
“We’ve rolled out multiple AI tools through our intelligent marketing operating system WPP Open, including the latest foundation models from Bria, Google and OpenAI, and at Google Cloud,” Read said in a statement. “Next we launched our Performance Brain to predict the best-performing content ahead of campaigns going live. These products are being deployed at scale, together with investment in training for our people. WPP Open was also at the heart of our most recent new business successes, including major media wins with Nestlé.”
He added: “Our outlook for the full year is reiterated. We remain on track to return to growth in the balance of the year, supported by an encouraging new business pipeline and the strength of our business creatively and in media, both powered by new AI capabilities, while our simpler structure will drive organizational flexibility and stronger cash conversion.”
With files from Greg Hudson and Andrea Hernandez
