4th March 2025
Green Square’s Tony Walford examines where things went wrong after the holding company’s 2024 results sent shares sliding.
2024 was something of an annus horribilis for WPP and Mark Read, posting the worst figures of the global groups in marcomms with like-for-like net revenue down 1.0% to £11.4bn in the year. This compares to Publicis leading the pack with 5.8% growth, Omnicom at 5.2% (although pre-pass-through costs), and even struggling IPG managing to grow a little at 0.2%. The only other group to report a revenue reduction was Dentsu, and that was only by 0.1%.
WPP’s operating profit margin improved 0.2% to 15.0% due to cost savings and it continued to invest in AI and technology. Staff costs remained constant as a percentage of net revenue, which meant overall there had to have been salary savings – 6,000 staff in fact, around 3,000 in each half year. The January mandate that staff had to return to the office four days per week caused a stir internally but any impact this has had in terms of resignations would not be factored into the staff numbers for 2024.
The only WPP region that posted positive growth in 2024 was Western Europe (representing 21% of WPP net revenue) with revenue rising 1.7% as Spain, France and Italy offset a 1% fall in Germany.
The UK (14% of net revenue) was down 2.7%, North America (39% of revenue) declined 0.7% and China a whopping 20.8% (most of this in Q4) due to ”client losses and macro pressures impacting media and creative businesses.”
The “rest of the world,” representing 26% of net revenue (including China) declined 2.6%, with India, LatAm, Middle East and Africa mitigating some of the Chinese hit. Interestingly, Read singled out TikTok as one of WPP’s fastest-growing trading partners, but I’m not sure this is something I would have championed given the fickle nature of US government sentiment that can turn this platform off at a moment’s notice.
WPP’s share price immediately fell 20% on the news but has recovered a little to be 15% down at the time of writing. This is still a massive drop.
What’s gone wrong and how can WPP fix it?
Q4 was particularly miserable with net revenue dropping by 2.3%. Read singled out “project-based work across specialist creative agencies” as the main culprits, mentioning AKQA, Landor and Design Bridge in the Q&A that followed the presentation as being “0.8% of the drag”. Hogarth was flagged as a bright point with growth in “mid-single digits,” but AKQA suffered a fall in the “low double digits”.
2024 saw Ajaz Ahmed, founder of AKQA, and other key players within the agency depart. AKQA was combined with Grey in 2022, then rolled up with JWT, Y&R and Wunderman to form part of VML. A £237m impairment charge (basically writing down the value of agencies on the balance sheet) was taken in 2024, most of which related to AKQA. However, in the post-presentation Q&A, Read stated AKQA had “gained three major clients in 2025 so far and a good client win in VML yesterday”, which was some positive news.
Q4 saw the disposal of FGS Global, a significant part of WPP’s PR portfolio. While PR only represents 9% of revenue, it fell 1.7% over the year but tellingly 5.3% in Q4, following the disposal of FGS. At 3% of revenue (one-third of the PR discipline), given bedfellow Burson suffered “mid-single digit decline” (Ogilvy PR wasn’t mentioned), we have to ask how much value WPP places on this element of its offer going forward.
Key reasons for 2024 being such a car crash were given as the knock-on effect of client losses in 2023, with one particularly large healthcare client impact. The biggest revenue reductions sector-wise were healthcare (down 7.2%) and retail (down 7.8%). The latter is quite surprising as we at Green Square have seen retail as a strong sector for many of our clients in 2024. That said, WPP saw positive growth in CPG, telecom, media & entertainment, financial services, travel & leisure and even automotive, a sector which has struggled in the last few years. Read also made the point that while revenue overall was down, the top 25 clients grew 2% last year.
A huge amount of emphasis was placed on the behemoth that is GroupM which is clearly being seen as the saviour for the group. GroupM represents 40% of WPP net revenue, saw 2024 growth of 2.4% and WPP brought back Brian Lesser in September as CEO (he had previously headed GroupM until 2017 and before that was at WPP’s 24/7 Media).
Emphasis was placed on the success of WPP Open (WPP’s AI operating system which integrates all its services, data and tech into one application, enabling clients to see results in real time) and how it helped WPP win major new clients Amazon, J&J, Unilever and Kimberley-Clark. A big chunk of the earnings call presentation was effectively a pitch of what GroupM does and how it’s investing in new leadership, integrating WPP Open and building proprietary data assets through AI to integrate and drive marketing across every channel. This compares favorably to Dentsu’s presentation, which made no mention of AI (apart from what others were doing), instead focusing on turning its decline around through greater efficiencies.
The GroupM presentation was impressive stuff, but it’s clear there’s still lots to be done here and Read acknowledged that GroupM’s growth had not been as good as its peers being “around 10% down from where it should be”. Given its prominent position within WPP, we have to ask what WPP would be without it – probably not much!
The outlook for 2025
And what of the outlook for 2025? The forecast is for net revenue to be flat at best but could decline by up to 2%. Apparently, the year has started pretty grimly, with the first two months impacted by global uncertainty making clients cautious to spend, together with the run-off impact of client losses in 2024.
We were told it will take a little while for new client wins to ramp up, and that H2 will be where the growth will come (if any). The profit margin is expected to be constant at 15%. On staff retention, this “is not an issue, and we look for other ways aside from remuneration to reward staff.” The indication then is there’s not going to be much in the way of pay rises and, coupled with the revolt against the “four days in the office” mandate, I’m scratching my head as to what these “staff retention incentives” could be.
As for M&A, there was little mention of this aside from “adding up to 1% of revenues,” so on £11.4bn, that’s up to £114m more revenue from M&A overall then. Not much in the grand scheme of things, so we shouldn’t expect any seismic deal announcements this year.
In sum, WPP appears to be putting everything on red in getting behind GroupM and Open, which may not be a bad shout given the issues it’s having elsewhere. In selling off FGS to KKR (and back in 2019, 60% of Kantar to Bain), we’ve witnessed some key assets being divested under Read’s tenure and I’m wondering if we’ll see a number of smaller disposals over the coming months as WPP continues to focus down on its six agency networks.
Mark Read has had a pretty tough ride as CEO, and today’s announcement hasn’t helped. I wish I could say it was a rollercoaster, but there haven’t been many “ups” for the guy. I truly hope 2025 is better than the guidance given today, but pinning it all on a hopeful recovery in the second half doesn’t bode well.