In a quarter that took it by surprise, the world’s largest advertising group, WPP, cut its full-year forecast after seeing a big tech and retail ad spend pullback.

London-listed WPP posted revenues of £7.2 billion for the six months ending in June, up 3.5% on a like-for-like basis compared with the same period in 2022. However, pre-tax profits for the first six months of the year, tumbled to £204 million from £419 million in the same period in 2022.

The company, which counts Google, Adobe, Meta, and Microsoft among its clients, saw a nearly 5% drop in first half year revenues thanks to a decline in tech sector ad spend.

The decline is significant, as revenues from big tech account for approximately 18% of WPP’s overall business. The other sector in which WPP suffered a large drop in ad spend was retail, falling 7.9%, thanks to the loss of big U.S. pharmacy chain, Walgreens, which had retained WPP as its global marketing and comms shop since 2017.

In response, WPP revised its full-year forecast to between 1.5 and 3% after predicting growth of 3 to 5% earlier this year.

The slowdown in tech ad spend took a toll on WPP’s integrated creative agencies, such as VMLY&R and Wunderman Thompson, which reported a 2.3% decline in Q2. WPP’s media business was a bright spot, however, with GroupM revenues up 6%.

By region, Canada eked out marginal revenue growth of 0.9% after being down 4.1% in Q1.

“There’s no doubt that we were taken a little bit by surprise by cuts in spending by our technology clients and some reduction in technology project spend that’s primarily been in the U.S.,” says Mark Read, WPP’s chief executive.

However, Read remained optimistic, stating that big tech clients remain significant advertisers and that the companies are in an adjustment period. He also cited new client wins like Reckitt, manufacturer of Durex and Clearasil, and also Ritz and Oreos maker, Mondelez. The CPG side was robust, with revenue growth of 15% for the first half of the year for what constitutes 26% of WPP’s business, partly offsetting dips in tech, telco and retail ad spend.

“Client spending in consumer packaged goods, financial services and healthcare remained good and, despite short-term challenges, our technology clients represent an important driver of long-term growth,” Read says.

In July, WPP competitor, holding company IPG delivered tepid Q2 financial results. Organic net revenue was down 1.7% year-over-year in Q2, with a 2.5% decline in the U.S., the company’s largest ad market.

While IPG’s specialist division (PR, experiential, entertainment and health) saw 3.7% organic growth in the quarter, its larger divisions of media, and data and engagement, fell 1.5% year over year.

Meanwhile, Omnicom, also recently disappointed with its Q2 numbers, missed revenue targets with the company warning of spend uncertainty.