WPP has reported Q1 2023 revenues of £3.46bn, up 11.9% year on year, on the back of continued growth across the company and with only a slight impact from slowing technology client spend.
On its preferred measure of revenues less pass-through costs, which totalled £2.83bn, its organic growth was 2.9%.
Chief executive Mark Read said the group remains on track to deliver its full-year guidance of 3-5% organic growth on this revenue measure.
Momentum towards the above goal was boosted by net new business worth $1.5bn won in the quarter, including Adobe (media), Ford (social media), Maruti Suzuki (media), Mondelez (production), Lloyds Banking Group (technology) and Swissport (public relations).
Read said: “We have seen a positive start to the year, in line with expectations, reflecting continued spending by clients in communications, customer experience, commerce, data and technology to support their businesses and brands.”
GroupM, its media buying powerhouse, continued to “perform strongly” and delivered 6.1% organic growth. This was the lion’s share of growth in the global integrated agencies division, which houses the group’s portfolio of creative agencies. Excluding Group M, the division registered 0.7% organic growth.
A standout piece of new business was Wavemaker's capture of Adobe's $250m Americas media account and additional $100m in global customer engagement and retention duties.
Summing up the quarter for its creative agencies, the group observed “very good growth at Ogilvy driven by strength in consumer packaged goods clients and recent new business wins. This was partially offset by a slower start to the year at Wunderman Thompson, primarily due to lower spend from some technology clients, and AKQA Group, reflecting a softer start to the year at Grey.”
Ogilvy's new business includes the aforementioned Lloyds Banking Group technology win, which saw Ogilvy Experience take the financial client's CRM account from Havas.
Performance against Publicis
WPP is the fourth of the big six holding companies to report its first quarter figures. Its organic growth came in higher than Havas (1.9% on a net revenue basis) but lower than Publicis (7.1% on a net revenue basis). Omnicom does not publish net revenue figures, but claimed organic growth of 5.2% on total revenues and on an equivalent basis WPP's organic growth was 4.9%.
Asked whether he felt WPP's results were disappointing in comparison to peers, Read told Campaign: "It is very much what we expected and we remain confident in our guidance of 3% to 5% for the year overall. It's interesting that our results are very much in line with Google and Meta and matches their growth of 3% in the quarter."
Publicis’ stronger growth means it has now overtaken Omnicom as the second-largest holding company by revenue and puts it close on WPP’s heels. The French group’s Q1 net revenue of €3.79bn translates to £2.73bn in sterling terms at today’s exchange rate, not far off WPP’s £2.83bn revenue less pass-through costs.
WPP was outpaced by Publicis in the two groups’ major markets of North America and Europe. In North America it delivered organic growth of 1.9% to Publicis’ 5.7%. WPP divides Europe into the UK (up 7.4% organically) and Western Continental Europe (up 3.4% organically) while Publicis reports for Europe as a whole (up 12.3% organically).
Unusually, developed markets generated better growth for WPP than developing markets, with the UK its fastest-growing region, up 7.4% organically to £377m.
In contrast, there was just 1.9% organic growth across the developing regions of Asia-Pacific, Latin America, Middle East and Central and Eastern Europe, including a 13% drop in China and a 1.4% drop in India.
Acquisitions and AI
WPP’s strategic moves during the quarter included three acquisitions: influencer marketing agencies Goat and Obviously and healthcare PR agency 3K Communication. It also acquired sonic branding agency Amp this month.
The company also highlighted its engagement with AI, a topic of growing interest to investors.
Read pointed to focus on AI going back five years, “with many examples of our work with clients, using the main AI platforms, in-market today”.
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