Ad giant WPP says weaker spending by US tech firms will dampen growth
The firm said it expects like-for-like revenue growth of 1.5 to 3 per cent for the year
The advertising giant WPP has said that weaker spending by American technology businesses will dampen its growth in 2023. Shares in the London-listed firm slid in early trading after it reduced revenue growth forecasts.
WPP said it expects like-for-like revenue growth of between 1.5 and 3 per cent over the year, cutting its previous guidance of between 3 and 5 per cent growth.
The update came hours after Apple reported a slowdown in revenues for its third straight quarter amid disappointing iPhone sales.
Other ad agencies such as S4 Capital, the firm run by former WPP boss Martin Sorrell, provided gloomier outlooks as firms cut back their marketing budgets.
In July, Omnicom Group blamed a pause in spending from tech firms and telcos for lower than expected sales. John Wren, its CEO, told analysts that these companies had grown “conservative” in their costs after “pretty severe restructurings” in the first half of the year.
On Friday, WPP revealed revenues of £7.2 billion for the first half of 2023, representing 3.5 per cent like-for-like growth against the same period last year. The company said it saw growth in the vast majority of regions, although highlighted that its China business grew “less strongly than expected”. But its North America operation declined during the second quarter.
“Our performance in the first half has been resilient, with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects,” said Mark Read, WPP’s chief executive.
“This was felt primarily in our integrated creative agencies. China returned to growth in the second quarter, albeit more slowly than expected. In the near term, we expect the pattern of activity in the first half to continue into the second half of the year.”
WPP said it saw a “solid” new business performance over the year, flagging $2 billion worth of new billings over the half-year.
The company also highlighted the increased use of AI in its operations over the period, reporting that it has delivered work using AI for clients such as Nestle, Nike and Mondelez.
Shares in the firm were 7.1 per cent lower on Friday morning.
