WPP’s revenue took an unexpected hit this third quarter, marking the second consecutive quarterly revenue decrease compared to its annual forecast.
The slump, attributed to “declines in North America, with continued weakness from technology clients and in China” resulted in a 0.6% drop in Q3 revenue, bringing it to £2.83 billion.
Breaking down the individual contributors, the report showed Group M, usually a strong performer, only noted a 1.6% growth within the period – a significant slowdown from earlier quarters when revenue was up 6%.
In addition, despite a comparative improvement from the second quarter and an acknowledgement that Ogilvy ‘grew well’, the integrated creative agencies still declined 1.1%.
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Yet it was North America, which at a third of its revenue, represents WPP’s largest market, which created the biggest dampen on WPP’s result, seeing revenues decline by 4.1%.
In the UK, growth was similarly subdued, with only a 1.1% increase despite a global growth rate of 2%.
In response, the company has announced it is to make £100m in savings by 2025 through “two significant moves” – a decision thought to mean imminent job cuts.
The first approach WPP aims to cut costs through is by streamlining the “simplification of the operating model” of Group M – aided by the recent merger of VMLY&R and Wunderman Thompson to create VML Group.
The announcement comes amid the backdrop of Group M’s operations in China facing an investigation by the Shanghai Economic Police over allegations of bribery.
It also follows in the wake of other ad holding companies have recently reporting their revenue results, with Havas growing by 4.5% and IPG declining by 0.4%.
