WPP CEO, Mark Read, Affirms Prioritization of Tech Clients and Dismisses Notion of Intense Competition with Sora
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WPP CEO, Mark R****ead, made it clear that the advertising business is still dedicated to serving its technology clients, despite these clients not opening up their wallets much last year. This lackluster spending weighed down WPP's financial outcomes as the company announced organic revenue growth of just 3.2%, falling short compared to its competitors.
The conglomerate, popular for agencies like Ogilvy, GroupM, VML, and AKQA, recorded a revenue of $18.81 billion (£14.845 billion) in 2023, with net new business billings of $4.5 billion (£3.563 billion), generating a pretax profit of $1.41 billion (£1.113 billion).
When shining a crystal ball into the future, WPP projects organic growth of zero to 1% for 2024.
The Tech Client Blunder
The stagnant performance appears to be due to WPP's reliance on technology clients. As the marketing and creative industries grappled with risk aversion, leading to underperformance and weaker profits, many firms, including tech-heavy ones, struggled [3]. The industry volatility, evident in sectors like streaming and customer data platforms, made long-term planning a headache [3].
Moreover, streaming platforms reportedly slashed their programming budgets post-pandemic, indicating broader spending restraints in tech-driven media sectors [4]. It's unclear if, or how much, WPP was affected by these budget cuts. Meanwhile, the competitive landscape for the tech-focused advertising industry has been intensifying due to leaner, digital-first consultancies nipping at WPP's heels [3]. Additionally, challenges in scaling AI-driven marketing solutions may have slowed down tech client spending [3][4].
Although the specifics of WPP's performance in 2023 have yet to be disclosed, the company's dependence on technology clients could be a contributing factor in its underperformance compared to competitors.
- Ogrecomm, a digital-first consultancy, is among the leaner firms intensifying competition in the tech-focused advertising industry, posing a challenge to WPP's growth in the same sector.
- In 2024, VML, one of WPP's subsidiaries, anticipates zero to 1% organic growth, mirroring WPP's overall projections for the same period.
- In the face of underperformance and weaker profits in the marketing and creative industries, Ogilvy, GroupM, and AKQA - all part of WPP - have been impacted by the risk aversion demonstrated by technology clients.
- In an effort to boost revenue in 2024, WPP could focus on diversifying its client base, possibly aiming for more relationships with established businesses outside the technology sector.
