Dive Brief:
- WPP’s revenue for the first half of 2023 grew 6.9% year-over-year for a total of $9.2 billion, the company said in its latest earnings release. Like-for-like revenues less pass-through costs, which consist of fees paid to outside providers, increased 2%.
- North America, and in particular the U.S., weighed on growth, with executives citing a drop in spending by technology clients as one factor dragging down results. North American revenues declined 4.1% in Q2 and 1.2% across the first half of the year.
- Expecting macroeconomic uncertainty to continue into the second half, as well as lower spending from technology-related clients, WPP revised its 2023 outlook, projecting like-for-like revenue less pass-through costs to grow between 1.5%-3%. The previous guidance was 3%-5% growth.
Dive Insight:
Like the other agency holding companies, WPP’s earnings are being negatively affected by continued macroeconomic concerns, particularly as they affect technology and technology-related clients. Outside of the U.S., growth was in the mid-single digits.
“Our performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects,” said WPP CEO Mark Read in a statement. “In the near term, we expect the pattern of activity in the first half to continue into the second half of the year.”
The company noted it has added $2 billion in net new billings over the first half of 2023, including assignments from Reckitt, Mondelez, easyJet, Lloyds Banking Group, Pernod Ricard and Maruti Suzuki. Read also noted the company’s strong performance at the Cannes Lions Festival, winning five Grand Prix and 165 total Lions. Mindshare was also recognized as the most-awarded media agency at the festival.
Like other holding companies and agencies, WPP is working hard to develop its AI capabilities to remain profitable and competitive. WPP is using AI to automate workflows, speed the process of ideation and concepting, and developing personalized creative for its clients. The company noted it is working with technology from all of the main AI companies, including Adobe, Google, IBM, Microsoft, Nvidia and OpenAI, with dedicated and proprietary enterprise platforms.
“AI will be fundamental to WPP’s future success and we are committed to embracing it to drive long-term growth and value,” Read said.
WPP results were led by a strong performance from media planning and buying unit GroupM, which grew 6.1% in the first half. Those gains were partially offset by a 0.8% decline at other global integrated agencies.