WPP shares tumbled nearly 20% in early trading today as the British-based ad holding company reported a pretty grim Q4 2024 with like-for-like revenue revenue less pass-through costs (its preferred measure of growth) down 2.3% with growth in Western Continental Europe up 1.4% offset by declines in North America -1.4%, UK -5.1% and the rest of world -4.8%, including -21.2% in China, where it has major reputational problems.
For the full year reported revenue is down O.7% (£14.9bn) with like-for-like less costs at £11.4bn, down a chunky 4.2% and well adrift of rival Publicis Groupe. WPP had been forecasting more or less break even in terms of growth, hence the sharp shares reversal.
What it calls global integrated agencies fell 2.2% in Q4 (down down 0.8% for the full year, media business GroupM held steady at +2.7% in Q4 (2.4% for the year) while other so-called integrated agencies (not clear which ones these are but could include AKQA) fell an alarming 6.5%, -3.9% for the year. Profits recovered to over £1bn after a number of big write-offs in 2023.
The poor results are bound to lead to further questions over WPP’s leadership, led by CEO Mark Read.
Read says: “We achieved significant progress against our strategy in 2024 with the creation of VML, Burson and the simplification of GroupM – some 70% of our business. We sold our stake in FGS Global (PR firm) to create significant value for shareholders. And we increased our margin, while stepping up our investment in AI through WPP Open, which is now used by 33,000 people across WPP.
“The top line was lower, however, with Q4 impacted by weaker client discretionary spend. We did see growth from our top 25 clients of 2.0% and an improving new business performance in the second half of the year with wins from Amazon, J&J, Kimberly-Clark and Unilever reflecting the strength of our integrated offer.
“The actions we are taking across WPP will strengthen our existing client relationships and drive our new business results. We expect some improvement in the performance of our integrated creative agencies in the year ahead. At the same time, we have comprehensive efforts underway to improve our competitive positioning through new leadership at GroupM, with further investment in AI, data and proprietary media.”
Which is much the same message as before, the problem for Read and co. is it’s taking an awful long time to deliver. With Publicis overtaking WPP in revenue terms and the Omnicom/IPG merger looming there is an opportunity for Read to get rid of some of these “other” integrate4d agencies which are having a disastrous effect on the numbers. Being the biggest, founder Martin’s Sorrell’s mantra and its long-term strategy, no longer looks credible.
At today’s early morning share price the one-time world ad leader is valued at just £6.8bn (Publicis is around £20bn.) Predators will have taken note.
