WPP Cuts Revenue Growth Forecast As Clients Curb Ad Spending
WPP Plc, the world’s largest advertising company, cut its full-year revenue forecast as clients slash marketing spending, particularly in the consumer-goods sector.
Like-for-like revenue growth is expected to be between zero and 1 percent in 2017, London-based WPP said as it reported first-half earnings Wednesday. That’s down from an earlier 2 percent forecast.
WPP, which works for brands including Ford, Unilever and Marks & Spencer, has seen its stock fall 12 percent this year amid sluggish global economic growth and pressure on its businesses in North America. In March, the stock had its biggest drop since the financial crisis when the company projected its initial 2 percent growth forecast, the slowest pace since 2009.
“In the last year or so, growth has become even more difficult to find,” Chief Executive Officer Martin Sorrell said in the statement. “For the short-term, we have to weather the storm.”
WPP singled out ad spending on consumer goods -- items such as laundry detergent and toothpaste that make up about one-third of WPP’s revenue -- as coming under particular pressure. Makers of these products are increasingly focused on cost-cutting and are scaling back their marketing budgets, WPP said.
“Some of the weakness was expected, however this is still an incremental disappointment and we would expect to see weakness today,” Tamsin Garrity, an analyst at Jefferies Group, said in a research note.
WPP said that it didn’t experience any significant loss in revenue from clients or of data from a cyberattack it suffered in June. The attack took down WPP’s website and caused disruptions across businesses including the creative agency Ogilvy and Mather, a person familiar with the matter said at the time.