WPP, the world’s largest advertising group, this week announced its worst set of annual results since the 2009 recession, with revenues falling by 0.3% and net sales dropping 0.9%.
The news capped a rough year for the business, which cut its sales outlook three times after major consumer goods clients such as Unilever cut spending and as Google, Facebook and consultants Accenture encroached on its territory.
Despite investors expecting WPP to echo peers such as Omnicom and Publicis in sounding more upbeat about 2018, the UK company surprised the market by stating that it expected no sales growth at all in 2018.
Commenting on the results, Sir Martin Sorrell, WPP’s chief executive, admitted 2017 “was not a pretty year”, but said that it was currently looking to accelerate a programme to simplify the business by aligning digital systems, platforms and capabilities to provide bespoke teams for its clients as opposed to the different agencies that currently compete with each other to win contracts.
WPP will now look further into a strategy it currently uses for its biggest clients such as Ford and Colgate-Palmolive, where it creates a single team to provide all the services required, rather than using multiple agencies, to see if it could boost effectiveness for clients.
Sorrell (pictured) said he believed “clients want things to be much more agile, simplified, better and cheaper and that is what we have to respond to. We have been going in that direction but we have to go faster.”
Richard Hunter, head of markets at Interactive Investor was not convinced by WPP’s concerns over the market in 2018. He said: “Competition is increasingly fierce within the sector, and the jury is still out as to whether WPP has suffered due to a cyclical change or whether the landscape is actually structurally different.”
