Flat Is The New Up? WPP Still Struggles To Grow

Mark Read WPP

In the midst of a three-year turnaround plan, WPP posted lackluster results for Q4 and 2019. Revenues dropped 1.9% in Q4 and 1.6% for 2019, bringing full year revenues to roughly $14 billion.

WPP’s stock dropped almost 15%, its sharpest decline since 1992.

Most of WPP’s issue stem from North America, where like-for-like revenues dropped 5% in 2019 to $6.3 billion. The group’s specialist agencies, including AKQA, GTB and the healthcare businesses struggled in the region, declining by about $2.3 billion.

CEO Mark Read said performance was in line with guidance for the year. WPP projects flat growth for 2020.

“The year has fallen as much as we expected,” he said. “We’ve set our guidance for 2020 in line with that.”

Transformation, cont’d

Despite lackluster results, much of the heavy lifting around WPP’s structural transformation is complete.

WPP has gone from nine creative networks to five. It completed the mergers of VMLY&R and Wunderman Thompson, and the former has returned to growth. And WPP sold a majority stake in Kantar to Bain Capital for “a good price,” Read said.

WPP has also finalized its leadership team and brought on new clients including Instagram, Mondelez, AXA, eBay and Hasbro. Overall, WPP expects billings under review to be half of the $1.3 billion that went under review at the beginning of 2019.

But more importantly, WPP has retained clients, unlike in 2018, when $4 billion of billings went under review.

“Our new business pipeline is very solid, and very little of the new business that’s under review is from WPP,” Read said.

WPP will continue to lean into new offerings around creative transformation, ecommerce, technology and experience as it staves off declines in its legacy communications businesses. Clients are adopting these offerings, leading to 10% growth in business from the technology sector and 15% growth in the luxury goods sector.

Even CPG bounced back a bit, growing business with WPP by 3% last year.

“The communications business is a good business, but it’s a business WPP needs to break out of,” Read said. “CMOs of large and small clients need a broader set of capabilities.”

But WPP is struggling to grow its automotive clients after its big Ford loss in 2018, and is punching under its weight in financial services, Read said. And healthcare, a vertical where Omincom and IPG are doing particularly well, has been a big drag on WPP’s business. An attempt to bring healthcare agencies under one group in 2019 to strengthen performance ended up weakening the group overall.

“Healthcare has been one of the toughest vertical sectors for us,” Read said. “We’ve addressed in part by putting those agencies back where they came from. That started to have an impact, but it will take time.”

WPP, which has $700 million of business in China, has not seen an impact from the coronavirus outbreak, but long-term impacts are unclear.

“I’m impressed with the resilience of our people and their ability to get on with the work,” Read said.


GroupM had a strong year in 2019, but the disappearance of the third-party cookie will have a major impact on the media world.

“What’s happening with cookies is symptomatic of a larger trend in society of people wanting more control over data and how it’s used,” Read said.

WPP is already seeing lower prices in programmatic auctions on Safari, which blocked third-party cookies with ITP, as less data makes impressions less valuable. But WPP is confident that the industry will come up with a solution to continue tracking the performance of its ad campaigns – whether that’s created by Google or not.

Programmatic buying that’s cookie-dependent is already “a relatively small part” of WPP’s business as it focuses on other signals like context and panels to target and measure media. The real brunt of the change will be felt by ad tech intermediaries that do not have a first-party relationship with consumers.

“It will reduce the value of data in the ecosystem and make life tougher for intermediaries and people who don’t have first-party relationships,” Read said. “Net-net, I don’t think the cookie apocalypse has a big impact on WPP.”

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