WPP cut 7,000 jobs over past year
WPP has cut 7,000 jobs since June 2024, according to its H1 earnings report.
The total number of staff now stands at 104,000, compared with 111,000 in June 2024, representing a decrease of 6.3%.
Headcount since the start of this year has dropped by 3.7% and the agency holding group expects job cuts in Q2 alone to generate more than £150m in annualised gross cost savings from next year.
Overall staff costs were down 7.5% in H1, partly due to the lower headcount, as well as lower staff incentives, which were down 60.1% year on year at £59m.
During the earnings call, chief financial officer Joanna Wilson conceded that incentives are also likely to be down in H2. However, she stressed that the company is “sensitive to the importance of motivating our top talent”, adding: “This is reflected in our planning assumptions.”
Operating profit plunges
WPP’s reported operating profit almost halved in H1 to £221m, from £423m in the same period a year earlier.
Revenue less pass-through costs — the company’s way of reporting net revenue — fell 4.3% on a like-for-like basis to £5.03bn.
In light of the results, WPP halved its dividend to 7.5p per share. It is also planning to launch a review of its future capital allocation policy under incoming CEO Cindy Rose.
Last month, the company announced in a trading update that it had downgraded its full-year revenue less pass-through costs forecast, now expecting a decline of between 3% and 5%.
Shares fell to a 16-year low on Thursday following the results, but have since recovered to roughly the same level as opening. The company’s stock has fallen by 40% in the past year.
Weak UK performance
In H1, on a like-for-like basis, revenue less pass-through costs in the global integrated agencies segment fell 4.5%, with its biggest sub-category, WPP Media, down 2.9%.
This has been impacted by a particularly weak Q2: the segment as a whole declined 6%, with WPP Media down 4.7%.
All of WPP’s key markets showed a decline, but the UK performed worst: revenue fell 6% in H1, with the company citing client losses in telecoms, media and entertainment offsetting growth from creative network Ogilvy.
Examining other regions, Western Continental Europe revenue declined 5.5%, rest of the world dropped 5.4% and North America saw the smallest decline at 2.4%.
Within the rest of the world category, revenue in China fell 16.6%.
Continued AI focus
While acknowledging “a challenging first half” as a result of “pressures on client spending and a slower new-business environment”, outgoing CEO Mark Read pointed out that the company “made significant progress on the repositioning of WPP Media, simplifying its organisational model to increase effectiveness and reduce costs”.
He added that the “acquisition of InfoSum, the launch of Open Intelligence and the continued adoption of WPP Open all strengthen our data and technology capabilities”.
According to the latest earnings, usage of WPP Open has grown from around 60% of client-facing staff in March to roughly 85% in June. WPP plans to continue prioritising investment in WPP Open, AI and data.
At the start of the year, the company announced at its capital markets day that it will bolster investment in AI-driven operating system WPP Open.
Two months later, it acquired InfoSum as part of this strategy. In June, WPP unveiled a “large marketing model” called Open Intelligence, to be integrated into WPP Open.
AI has played a key role in WPP’s efforts to modernise its offering for clients. Lesser, who was appointed CEO of WPP’s media investment arm last summer, rebranded and repositioned what was once GroupM as “AI-powered” media outfit WPP Media.
Soon after the rebrand, Read announced his intention to step down as CEO. In a quick turnaround, Rose, a Microsoft executive, was confirmed as his successor in July.
Questioned on how Open Intelligence stands out from competitors during the earnings call, Lesser said: “We have the identity data for the traditional approach to digital advertising and we also have hundreds of partners that help us better understand consumer behaviour to drive performance.”
Referencing the walled gardens of Google, Amazon and TikTok, he explained how InfoSum would allow WPP to “learn from those datasets without having to centralise the data and own it”.
Lesser concluded: “We’ve seen success already on some of our long-standing clients in terms of outperforming traditional identity-based approaches to performance.”
Cindy Rose is the right choice for a CEO (but maybe not at WPP)