WPP unveils coronavirus savings plan following ‘weak’ March performance
WPP has unveiled a coronavirus savings plan to retain its market position while continuing to serve its clients at a critical juncture for the industry and the global economy.
These emergency measures follow trading figures which indicate WPP enjoyed a bumper start to 2020
The Ogilvy and Wavemaker owner has been busy developing public health campaigns for world governments and corporate clients since the coronavirus emergency first began, notably on home turf in Britain where it has spearheaded a public information service on WhatsApp.
However, this activity is insufficient to fill the yawning gap left by retreating ad spend elsewhere however as clients pull campaigns amid uncertainty at the duration and severity of the outbreak.
This unfavourable environment has pushed WPP to identify £800m of savings for the year, including shelving its dividend and share buyback plans as well as withdrawing forward guidance for 2020 until things settle.
These emergency measures follow trading figures which indicate WPP enjoyed a bumper start to 2020 before the health crisis hit in March. Over the first two months group revenue, less pass-through costs, rose by 0.4%, excluding China where the early impact of coronavirus precipitated a 16.1% decline. This performance was buoyed by significant account wins including Intel, Hasbro and Discover while retaining business from BBVA.
In March it was a different story however with the escalating ramifications of Covid-19 becoming clearer in the form of depressed economic activity although the precise impact is not quantifiable at this stage.
To steady the ship, executives and the board have also accepted a 20% pay cut for three months while simultaneously freezing new hires, reviewing freelance expenditure, postponing salary increases and bringing all discretionary spending to a halt.
Mark Read, chief executive officer at WPP, said: “The actions we have taken in the last 18 months to streamline and simplify WPP, together with raising £3.2 billion in asset disposals, have put WPP in a strong financial position.
“Across WPP we now have close to 95% of our people working effectively and productively away from their offices. I am very proud of the response from our people, who are looking out for each other and going the extra mile for clients while demonstrating the creativity, collaboration and resilience that will be key to the enduring success of WPP.
"At the same time, we are supporting many governments and international health organisations on communications programmes to limit the impact of COVID-19 on our communities. The important role we are playing in helping our clients navigate a difficult time gives us great confidence in the long-term future of the company.”
This is a challenging time for the ad holding groups more generally as the far-reaching consequences of coronavirus spread become apparent, such as a shift towards utility, e-commerce and live-streaming; the rise of a ‘homebound economy’ and a potential advertising recession.