WPP Slashes Profit Outlook After Sluggish Quarter
WPP issued a reduction of its profit outlook for the second time in consecutive quarters on Thursday, citing major headwinds.
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Big Tech has been buoyed by digital ad dollars, but they’re not marketing themselves very much – much to the chagrin of Big Advertising.
London-based ad agency WPP issued a reduction of its profit outlook for the second time in consecutive quarters on Thursday, citing major headwinds. This same week, rebounding ad revenue carried Big Tech’s own earnings reports.
Big Tech Snaps Back
The post-pandemic world hasn’t exactly been kind to the digital advertising ecosystem, with most companies slashing marketing budgets in the past two years, a dip that occurred simultaneously with Apple’s pledge to beef up privacy policies on its devices — undercutting the value of mobile web ads in the process. But Alphabet, Meta, and even oft-tortured little cousin Snap just reported much-needed rebounds in ad revenue.
Snap saw ad sales growth following two declining quarters. Ditto Google, which also saw YouTube ad revenue grow following three full quarters of ad declines. Meta saw ad revenue leap 24% year-over-year to $33.6 billion.
Unfortunately for WPP, which counts Meta, Google, and Microsoft among its clients, Big Tech isn’t redirecting that ad revenue into their own marketing budgets:
- WPP CEO Mark Read cited “cautious spending” by the tech clients, and specifically highlighted to the Financial Times that Meta had slashed its marketing spend by nearly 25% in the most recent quarter.
- US net revenue fell by over 4% in the most recent quarter, with a similar fall in China, another major market for WPP. The firm slashed its revenue growth forecasts in half, to just 0.5%-1%, which followed an earlier forecast cut in August.
Bad Press: The revenue slip isn’t the only bad news out of China for WPP. The FT reported last week that local police had raided the Shanghai offices of WPP subsidiary GroupM and detained a senior executive over allegations of bribery. WPP has dismissed the employee and says it’s cooperating with authorities. Still, that’s not exactly the type of buzz it usually tries to generate.