- WPP, the world’s largest ad firm by sales, announced it expects revenue growth of only 2% this year, and its slowest quarter of growth since 2012, as reported by The Wall Street Journal. WPP’s stock was down 8% in London trading on the news.
- The firm lost its AT&T and Volkswagen accounts, which combined for around 1% of its overall revenue, and CEO Martin Sorrell said advertisers were having issues with a low-growth, low-inflation environment.
- In the fourth quarter earnings call, Sorrell also said Amazon keeps him up at night rather than his three-month-old daughter, as reported by Business Insider.
In the call, Sorrell reiterated his statement that Google, Facebook and Amazon are all frenemies of WPP with Google as the friendliest of the group and Amazon on the unfriendly end of the list. He also said Amazon is a threat to Google in search ads because while people might be conducting research on Google, on Amazon they are more likely about to make a purchase making those ads more valuable to advertisers.
WPP isn’t alone in facing turbulent times. Competitors like Publicis Groupe have also been hit with lost accounts and are dealing with the same economic conditions that are impacting WPP and its clients’ spending. Paul Richards, an analyst at Numis, told the Journal that two of WPP’s biggest clients — P&G and Unilever — are both having what he described as a “tough time,” which directly influences their spending with WPP.
However, there are indications that slowing growth at traditional agencies is about more than marketers spending less on advertising overall. Instead, some may be pivoting away from agencies to work directly with digital platforms like Google and Facebook. Under this scenario, Amazon's efforts to reimagine itself as a major digital platform with advertising could further add to WPP's and other's woes while increasing its competitiveness against Google. Already, Amazon and Google are competing more on the content front.