WPP joins global rivals in defying fears of ad slowdown

WPP shrugged off fears that the world’s largest companies will rein in marketing expenditure this year as the advertising group predicted it will boost annual revenues despite macroeconomic turbulence.

“We’re looking at a much better pattern of client spending than people feared,” chief executive Mark Read said on Thursday as the agency conglomerate forecast an increase in like-for-like revenues for 2023 of between 3 and 5 per cent.

The figures from the London-based company sent its shares up 5.6 per cent in morning trading. They echo similar targets issued this month by its biggest rivals Omnicom, Interpublic and Publicis.

Taken together, they suggest the industry is having some success persuading clients it would be a mistake to trim ad spending in response to economic uncertainty and pressures on costs.

WPP, which owns agencies including GroupM, Wunderman Thompson and AKQA, is nevertheless forecasting a slowdown from the near 7 per cent increase in like-for-like revenues recorded in 2022.

Even after the advance on Thursday and a rally in the past six months, shares in the FTSE 100 company are down 9 per cent over the past year — underperforming those in its peers, all three of which have risen over the same period.

Read acknowledged that “there are definitely challenges in the global economy”. But he added: “People were fearing a pullback in spend at the end of last year — that hasn’t really happened . . . I did say to people last year not to catastrophise, and I think that’s what we’re seeing.”

Netflix’s recently introduced ad-supported subscriptions, the rapid rise of short-form video app TikTok and the retail industry’s push into marketing were giving brands new ways to reach consumers, Read said.

He added that the revenue improvement had been “broad-based” by client sector, though he said consumer packaged goods groups in particular were making a “renewed commitment to invest behind their brands”.

WPP’s results showed revenues rose from £12.8bn to £14.4bn in 2022 as the company signed up new clients including Danone, Nationwide and Verizon.

It retained Sony PlayStation, Tesco and Mars Wrigley, but lost the L’Oréal US media and PepsiCo accounts.

WPP said it was raising its final dividend by 30.5 per cent to 24.4p a share. Pre-tax profits rose from £951mn a year earlier to £1.16bn.

The results showed strength in most large markets in the final three months of the year, including a 12 per cent rise in quarterly like-for-like revenues in the UK, which Read said would “surprise a lot of people”.

The exception was China, where Covid-19 restrictions pushed quarterly like-for-like revenues down 8.4 per cent. WPP said a recent easing of restrictions in the country should contribute to its global growth this year.