WPP returns to growth in Q3

CEO Mark Read described the results as "encouraging" for its simplification plans, but North America and specialist agencies continued to struggle.
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Even though organic growth at WPP in Q3 was small, it is enough for its CEO to feel encouraged about the impact its strategic simplification will have on its performance.

The holding company reported a 3.7% year-over-year growth in revenue during Q3, with organic growth at 0.5% (organic growth was 0.7% when including the entire operations of Kantar, which WPP voted to sell 60% of its stake in earlier this year. The transaction was approved by shareholders on Thursday). Organic growth for WPP has fallen by 1.5% for the year-to-date.

While 0.5% is only slight growth, it is the first time WPP has grown since 2017, and follows significant declines in the first two quarters of 2019. Mark Read, CEO of WPP, described the growth as “encouraging” and an “important step” in its plan to reduce and simplify its operations.

While results were positive in most regions for WPP, North America organic growth was down 3.5% in North America, and currently sits at a 6.1% decline for the year-to-date.

The holding company’s global integrated agencies division – which includes most of its major creative and media agencies – posted 1.7% organic growth, largely due to no longer feeling the impact of previous client losses and improving retention with existing clients. Read pointed specifically to recently merged Wunderman Thompson and VMLY&R, as well as Grey, as particularly strong performers during an analyst call. On the other hand, organic growth within the PR division fell by 0.9% in Q3, with specialist agencies being hit particularly hard and posting a 3.4% decline.

Wins for WPP in Q3 include Ogilvy picking up part of the global Mondelez account (estimated to be worth $350 million in billings) and MediaCom winning media duties for eBay in North America and China (estimated to be worth $250 million in billings). The effects of some earlier losses, such as major portions of the Ford creative account leaving GTB last year, have yet to be felt, however. Read cautioned analysts that full-year guidance for WPP would remain unchanged, as it didn’t “want to be declaring victory in Q3 to declare defeat in Q4.”

WPP owns and operates creative agencies including Wunderman Thompson, Ogilvy, Geometry, Grey, Taxi and John St., among others, as well as the Group M family of media agencies.

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