In the three months to October WPP managed to almost halve its revenue slump, following the financial shockwaves of early 2020.
The Group M and VMLY&R owner said revenues less pass-through costs, its preferred measure, fell 7.6% on a like-for-like basis in the third quarter, versus a 15.1% dip in Q2. WPP chief executive
Mark Read has credited “new business” momentum for boosting the advertising giant’s Q3 financial performance but says he remains “cautious” about the pace of recovery from the shock of Covid 19. The results dovetail with WPP retaining Walgreens Boots Alliance’s $600m global integrated account, which it beat Publicis Groupe to win in the final stages.
WPP’s ‘resilient’ financial performance
The world‘s largest advertising company saw underlying revenue fall 7.6% in the third quarter, a marked improvement on the 15.1% decline seen in the previous three months.
Underlying revenues were down in all key markets, most notably in China and India where falls of 16.7% and 16.3% were recorded. In the West, the situation was somewhat more stable with the US dropping 5.5%, the UK 6.5% and Germany holding up best of all with a decline of just 1.8%.
WPP has transformed itself into a leaner organisation to deal with these challenges, with cost reductions set to come at the upper end of its £700-800m target.
On a divisional level the picture isn‘t as bleak, with VMLY&R in the US and Group M in the UK both conspiring to turn a profit over the quarter, despite the general downturn.
Highlighting these bright spots WPP wrote: “VMLY&R continued to be the best-performing global agency, and was down only slightly year on year, while Group M recovered strongly as client media expenditure picked up.“
Elsewhere the situation is more muted with Grey, Ogilvy and Wunderman Thompson all reporting steady if unspectacular improvements.
A disastrous year for events and travel undermined WPP‘s specialist agencies which were the worst performing branch as a whole, only partially offset by a strong public relations performance.
New business momentum
The mood music remains positive going forwards with $1.6bn of new business secured in the third quarter propelling WPP's year-to-date wins to $5.6bn.
Articulating the state of play, chief executive Mark Read said: “We have maintained our new business momentum as clients seek out our creativity and our skills in media, technology, data and e-commerce.“
Singling out the most significant wins Read added: “This month, Uber joined a growing list of major assignment wins that include Alibaba, Dell, HSBC, Intel, Unilever and Whirlpool and we continue to lead the new business rankings. We have also renewed and expanded our relationship with Walgreens Boots Alliance to encompass its data- and technology-driven marketing strategy.”
A cautious outlook for the remainder of 2020
With revenues a deeper hue of red than arch-rivals IPG and Publicis Groupe, which recorded declines of 3.7% and 5.6% over the same period, WPP will be treading cautiously to see out 2020.
Small comfort can be drawn from the fact that Havas and Omnicom fared even worse with double-digit revenue declines of 10.4% and 11.7%, although these figures are not directly comparable owing to different accounting methods between the groups.
Read concluded: “Given the tightening of coronavirus restrictions around the world and uncertainty in the global economic outlook, we remain cautious about the pace of recovery.“