The ad giant reported worse-than-expected revenues for 2024. In an update to the City, CEO Mark Read faced pressure from analysts as he braces for another challenging year.
Mark Read, CEO WPP.
Analysts had estimated that WPP’s net revenue would dip 0.4% in 2024. Instead, the holding company posted a 1% fall, with revenues down to $14.38bn (£11.35bn) on a like-for-like basis.
In Q4 alone, global revenue was down 2.3% year-on-year as China plummeted 21.2%, while the UK and North American markets saw slumps of 5.1% and 1.4%, respectively.
The outlook for 2025 is one of mixed fortunes. WPP said organic revenues in the first half of 2025 would likely remain flat or fall as much as 2% before hopefully improving in H2.
Shares plunged 18% on the update, the biggest drop it's seen in more than six years. Read Green Square’s Tony Walford detailed analysis of the holding company's numbers here.
Chief executive Mark Read faced a grilling from analysts during a briefing at its London HQ. Here’s what they wanted to know.
Advertisement
The loss of accounts such as Pfizer, Starbucks, L’Oréal, Uber, Walgreens, Sky and Yum China were a major blow to WPP in 2024. Read put that down to its team being “more focused internally than externally, particularly in the first half of the year.”
It ended the year with some decent wins, including Johnson & Johnson’s global media account, Kimberly-Clark and Pizza Hut’s creative accounts in the US and media and PR briefs from Henkel and Levi’s in Europe. Read also said to expect a “good” win to soon be announced out of its creative agency VML.
Despite the “encouraging progress,” he warned that the full impact of those 2024 losses is still to come, telling analysts that WPP will feel the effect well into the first quarter of 2025. It’s simultaneously battling “softer client spending” and increasingly complex briefs.
“The new business pipeline is strong. The nature of some of those means they’re taking longer to close than we’d expect,” he added. It won’t start to see the positive outcome from the accounts it’s landed until well into the second half of the year.
Analysts were also concerned by comments made just last week by the finance chief at major ad spender Proctor and Gamble (P&G) as it renewed its commitment to cut the number of agencies it works with. A decade ago, it had over 6,000 shops in its books; today, it’s less than half that number. 80% of P&G’s total media spend is now managed in-house and it has plans to in-house advertising production. P&G also said it no longer sees value in one long-term partnership with one core agency. Instead, it wants to pick and choose “creative talent regardless of agency” so its brands “can source the best creative work from anywhere.”
CPG is WPP’s largest sector – a worrying position if others follow P&G’s lead. But Read dismissed suggestions this was a trend it would see other clients adopting. “In 2024, we delivered mid-single-digit growth in CPG. We would expect to see continued growth.
“We’ve seen mixed comments from CPG clients and that’s reflected, perhaps, in some of the softer discretionary spending that we saw in Q4. Many of our clients ultimately continue to invest in their brands.”
He says P&G is an “outlier” and while some companies will continue to in-house certain elements of their ad mix, AI has opened up a new opportunity for its agencies to help clients with “marketing transformation” and create more integrated services.
To that end, WPP went into its poor performance update with an optimistic outlook based entirely on its ability to harness AI. It will invest £300m this year to expand its AI-powered platform, WPP Open, it said.
As of December, 33,000 members of the WPP group were using it. But it needs to better sell the solution to clients. “As we turn to 2025, one of the most important messages I want you to come away with is that WPP is leading in AI. Our push to AI is not based on activating data ID,” he said, taking aim at Publicis (more on that below). “It’s about applying to the end-to-end marketing process to deliver better returns to clients.”
That process is simple. Client briefs will run through a three-stage funnel: creative studio, production studio and media studio. Each is supported by AI. On the creative side, teams will tackle briefs using AI, surface new insights across different territories and test them in real-time against synthetic audiences. That work then moves into the production studio, which automates how WPP can turn ideas into content, faster. Finally, media studio takes those assets and automates the process of media planning and buying using AI.
When clients use the platform in this way, WPP sees a 29% improvement in productivity, an 86% reduction in delivery times and trillions more impressions evaluated.
With GroupM powering WPP Open’s Media Studio, the agency aims to have 100% of its clients use the platform.
Advertisement
The real focus of the next 12 months will be on GroupM, the “backbone” of this transformation plan. Read said the agency group has not fully realized its potential in the past 18 months, but under new CEO Brian Lesser it has a revitalized strategy pinned on a move away from traditional ID solutions.
Little surprise then that Lesser was served up to explain the move to analysts. But questions emerged about whether GroupM could really deliver as tech giants like Google and Meta make a bigger play for client spend through their own AI tools and if it needed a significant data acquisition (like Publicis’s £4.4bn buyout of Epsilon) to make this vision for integration work.
He’s banking on a different approach: “We believe that data connectivity is more important than simply owning a database. No matter how many traditional IDs you own, it will never be enough,” he said. So, no to an Epsilon-esque acquisition.
“The real power lies in connecting data across publishers, partners, retailers, platforms and clients and thoughtfully using our own first-party data assets in conjunction with the available data in the world. The future is about connecting disparate data sets to extract insights, create predictive models and drive performance.” In the next five years, Lesser said GroupM will be working with thousands of data partners and the only way to harness that scale is by leveraging AI: “No singular legacy database can manage that scale and complexity.”
In his short time at the helm, Lesser has refocused the agency on “making client experiences more seamless and frictionless.”
“We’re improving internal and external collaboration across GroupM and WPP, integrating media creativity and production more effectively,” he added. “We are further simplifying our structure to become a unified company with one voice clients and partners in 2024 we made significant strides in eliminating complexity, but we know that we have to be simpler and there is more work to do.”
Early signs that it’s working include retaining a portion of Unilever’s media business, winning some of Amazon’s media account and landing Johnson & Johnson $200m North American business.
Advertisement
But it will take more than that to convince investors that a complete turnaround of the business is in sight.
“Pinning its hopes on artificial intelligence investment to come to the rescue is not an argument which is carrying much weight with the market. Generative AI is perceived to be more of a threat than an opportunity for the business, and in early trading the shares slumped to their lowest level since the pandemic," said Russ Mould, investment director at AJ Bell.
“Pressure is likely to ramp up on Mark Read. Despite making some progress in simplifying the business, WPP can look from the outside like a bit of a jumble and more sweeping changes may be required if the company is to get back on track.”