Advertising giant’s creative business continued to struggle
Advertising group WPP returned to revenue growth in the third quarter as chief executive Cindy Rose’s recovery strategy began to bear fruit, despite its creative division continuing to face headwinds, reports BritPanorama.
The London-listed group posted revenue of £3.27bn in the three months to September, up 0.5 per cent year-on-year, following a prolonged period of sluggish sales.
However, revenue excluding pass-through costs—a closely scrutinised measure of underlying performance—slipped 2.1 per cent to £2.41bn.
While the decline represented an improvement on the second quarter, when the measure dropped 2.8 per cent, WPP’s creative agencies continued to act as a drag on the business.
WPP Media returned to growth for the first time since the turnaround began, edging up 0.3 per cent, while its production division expanded by 2.5 per cent. Creative revenue, by contrast, tumbled 5.1 per cent as clients persisted in tightening their purse strings, as reported by City AM.
The group held firm on its full-year guidance, projecting a low to mid-single-digit decline in underlying revenue during the second half and an operating margin of between 12 and 13 per cent.
Rose, who assumed the top role last year following her departure from Microsoft, has been charged with breathing new life into the advertising group after years of falling performance, client departures, and intensifying pressure from competitors.
Her three-year recovery blueprint—dubbed Elevate28—seeks to streamline WPP’s expansive agency network, reduce overheads, and steer the business back to growth by 2027. “We are on track to deliver phase one of Elevate28: stabilising our business performance and laying the foundations for a simpler, more unified WPP,” Rose said.
“Our third quarter results show further sequential improvement in LFL growth, in line with our expectations.”
The group won and retained several high-profile clients during the period, including Coca-Cola, Doordash, Nestlé, Uber and Google’s autonomous vehicle division Waymo.
Rose said appetite remained strong for WPP’s AI-powered advertising offerings, including its agentic marketing platform WPP Open, as the sector navigates the mounting impact of AI on creative production and media purchasing.
The business has also launched a new AI-enabled production facility in East London and broadened its data partnerships as it aims to compete more effectively with technology firms moving into the advertising space.
WPP’s latest trading statement comes after a challenging first half which saw the company eliminate a further 1,267 roles, taking its workforce reduction over the previous 12 months to 6.4 per cent.
The organisation has been trimming headcount and streamlining its agency structure as part of initiatives to deliver £500m in cost efficiencies by the end of 2028.
It anticipates achieving £100m in savings this year, alongside roughly £250m in restructuring expenditure.
WPP also confirmed intentions to raise at least £200m from asset sales as it looks to shore up its balance sheet. The company’s adjusted net debt stood at £3bn at the close of September, reduced from £3.6bn the previous year.
Despite the improved quarterly figures, WPP remains under considerable pressure to prove that its restructuring programme can deliver sustained growth.
The firm has relinquished its position as the world’s largest advertising holding group to France’s Publicis, while the rapid uptake of AI is compelling traditional agencies to fundamentally rethink their service delivery models.
Rose stated that WPP was preparing for the next phase of its turnaround, with the goal of returning to organic growth during 2027. In the UK, WPP has its head office on London’s South Bank and a campus in Manchester.
This latest update from WPP illustrates the ongoing challenges facing traditional advertising agencies amidst a rapidly changing landscape. The interplay between AI advancements and client expectations continues to shape the sector, demanding innovative strategies for sustainable growth while underlining the importance of adaptive leadership in navigating these complexities.
