WPP sees 'slightly subdued' new business outlook for big pitches

WPP has said 2019 has been "slightly subdued" for new business and sees "nothing major" on the horizon for the rest of the year when it comes to big pitches.

Mark Read, chief executive of WPP, said the world’s biggest advertising agency group faced less risk than in 2018 when it began that year with $3.2bn (£2.6bn) of business under review compared with $800m at the start of 2019.

WPP has defended and expanded several important accounts, including L’Oreal and Centrica, this year and Read said: "The pipeline remains good. It’s been a slightly subdued year for new business overall certainly compared to last year."

He said the company was focused chiefly on defending two media accounts during the second half of 2019 – Vodafone, where "we’re putting everything into that and working with them closely", and Novartis where WPP is one of but not the largest of the incumbent agencies.

"There’s nothing major yet" on the horizon in terms of other big reviews, Read told investors at the half-year presentation last week.

Net sales fell 1.4% in Q2, which was not as bad as expected and better than the 2.8% drop in Q1. 

'What we do is critical to our clients'

Read said a recent run of better results such as L’Oreal and Centrica showed "what we do is critical to our clients" and WPP can become a "more valuable" partner for brands.

Clients still value external help from agencies, according to Read, who has seen no "material change" in competition from new entrants such as Accenture compared with a year ago.

"Good ideas are really what clients are looking for" and "we see that better work leads to client wins and retentions", he said.

Although traditional creative work has been in decline, WPP has seen growth in newer tech-driven areas such as ecommerce and experiences, and Read showed three films from Tommy Hilfiger, Nike and Wendy’s to illustrate the work.

"The power of creativity in our view is never more important," he said. "Clients need growth and growth comes from creative ideas, from innovation and inspiration – the types of things that WPP companies uniquely provide, in my view, more than consulting companies."

He added that "clients do need partners" such as WPP to help them. "It’s not just a question of [clients saying], ‘how we can internalise work’ [by doing it in-house]," Read said.

He pointed out many tech firms, including Google, Facebook, Dell, IBM and Microsoft, are WPP clients. 

"All of those clients turn to WPP to understand what’s going on in their markets, what’s going on with consumers and how to communicate with them, and how to grow," he said.

Other clients "who want to succeed" on platforms such as Facebook, Google, Amazon and Alibaba also benefit from working with WPP, which makes the agency group "a much more valuable partner to those clients", according to Read.

Despite falling net sales, some parts of WPP grew, including "big tech" clients, up 16%, and luxury goods clients, up 7%.

"The premium ends of our sectors are growing," Read said, adding there was "nothing material that’s getting worse" across the rest of WPP. "In general, things are getting better or are the same."

WPP has previously said it expected bigger headwinds in the first half of 2019 because of the impact of last year’s account losses such as Ford’s US creative and GlaxoSmithKline’s media.

Read said he remained "rightly cautious" about the rest of 2019 and said it was "premature" to predict whether WPP might return to sales growth in 2020.