WPP returns to revenue declines in Q4

The North American region and specialist agencies were particularly weak, though CEO Mark Read is optimistic for the future.
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Holding company WPP’s organic revenue growth once again saw a dip in Q4, though the network remains optimistic about how its strategic plan will resonate with clients in the year ahead.

Organic growth for the full year at WPP dropped by 1.6% year-over-year, with a 1.9% decline in Q4. That’s a return to declines after posting modest growth in Q3 of last year.

The declines were attributed to factors such as North America, the company’s largest market, posting a 5.7% decline in organic growth, as well as an organic growth decline of 5.6% among its portfolio of specialist agencies during the last year. During an investor call, Mark Read, CEO of WPP, specifically pointed to the U.S., where specialist agency GTB lost much of its Ford business, as a struggle for the company at the moment. Growth at its global integrated agencies was down by 0.7%, while the PR segment was down 1%.

Despite this, Read was optimistic in an announcement accompanying today’s release, saying the company met its guidance for 2019, achieved its restructuring targets and completed the sale of a majority stake in Kantar, though he acknowledged “there is still much more work to do.” Looking just at the second half of 2019, organic growth was down 0.7% (compared to 2.5% in the first half), which also contributed to Read’s optimism. In its guidance for 2020, WPP expects organic growth to be flat to start off the year, with business performance improving throughout the year, though it also says it is too early to predict what, if any, impact the global coronavirus outbreak may have.

“Our new offer of creativity powered by technology has resonated with clients, as we’ve seen in good retention rates and important wins,” he said. “Perhaps most importantly, our clients and our people tell us that WPP has a clear new sense of purpose and is successfully instilling a culture of creativity, collaboration and openness. As we enter the second year of our three-year turnaround plan, our ability to attract and retain the best people is key to long-term growth.”

As part of a three-year restructuring plan that has seen the holding company move to “simplify” its operations. That has taken the form of merging several of its agency brands, such as Wunderman Thompson and VMLY&R.

Major global wins for WPP in Q4 included the global media accounts for Hasbro (MediaCom), insurance firm AXA (Wavemaker) and airline Lufthansa (Mindshare), though it also experienced losses on the creative front, such as on the global Johnson & Johnson account and Ogilvy’s global work on Kimberly-Clark. The company pointed out it had 15% growth in business from luxury clients, 10% from tech clients and 3% from CPG clients in 2019.

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

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