WPP blames Pfizer loss and tech client cuts for 1.6% revenue fall in Q1

WPP blamed the loss of its Pfizer business and continued cuts by technology clients for a 1.6% decline in revenues to $2.9 billion in the first three months of 2024.

The agency group had previously flagged that Q1 would be the toughest but its revenue performance lagged all of its main rivals – Publicis, Omnicom and Interpublic Group – which grew by between about 1% and 5%.

Global integrated agencies, the largest division, which includes both media and creative, suffered a 0.7% overall decline.

Growth slowed at media division Group M, which was up 2.4%, and the creative agencies continued a decline seen first in Q2 2023, dropping 3.3%.

The group’s two other key lines of revenue also suffered falls, with public relations down 3.3% and other specialist agencies down 7.6%.

“We always expected the first quarter to be the slowest quarter of the year because we have the impact of our technology budget cuts weighing on us and the impact of Pfizer on our business,” Mark Read, the chief executive, told Campaign.

“We do expect momentum to pick up as the year goes,” he added, reiterating the company’s growth forecast of between zero and 1%.

By region, WPP suffered particularly in the world’s biggest ad markets, North America and China, which were down 5% and 15% respectively.

Read said pressure on the Chinese domestic consumer, notably in the automotive and luxury sectors, and the Pfizer loss in the US were key factors.

He maintained that the picture looked better when looking at “the underlying performance” of some of its key agencies.

Hogarth grew by “high-mid single digits” and Ogilvy also grew, as did Group M, although the last was hit by client losses.

Newly merged VML was hit “largely as result of Pfizer” and AKQA “has also suffered somewhat from being at the forefront of digital transformation” as some clients delayed work, he said.

PR arm Burson “had its challenges” after three years of “strong growth” but corporate PR outfit FGS Global grew.

New client assignments, which included AstraZeneca, Molson Coors, Nestlé, Perfetti, Rightmove and Telefónica, were down by roughly half at $800m in net new billings in Q1, compared with $1.5bn a year earlier.

Analysts at Numis Securities described WPP’s results as “OK”, albeit “very slightly below” expectations, adding: “We assume conditions improve from here.”