WPP has smashed its own staff bonus targets and will pay out £592 million (US$793 million) – more than double pre-pandemic levels – to more than 50,000 staff after what it called an “outstanding” year, during which revenues grew 12.1%.
The world’s biggest agency group had begun 2021 predicting growth in the mid-single digits, but upgraded its forecasts throughout the year as the ad market came back strongly from the pandemic slump.
As recently as August, WPP had said it expected its annual “incentive pools” for staff bonuses would be about £450m compared with £185m in 2020 and £294m in 2019.
It is understood more than half of staff – upwards of 54,000 – are eligible for bonuses, with a bigger percentage paid in shares to senior staff to aid retention.
WPP has added more than 9,550 staff to reach a global headcount of 109,400, more than making up for the 6,500 posts shed by the company in 2020 during the worst of the pandemic.
The speed of the increase is another sign of the rapid recovery because WPP previously told Campaign at an investor day in December 2020 that it hoped to get to 110,000 staff by 2025.
WPP’s 12.1% growth in organic revenue less pass-through costs puts it near the top of its peer group, after Publicis reported 10% growth, Omnicom 10.2%, Interpublic 11.9% and Dentsu 13% (with 9.7% growth outside its home market of Japan).
Mark Read, chief executive of WPP, said: “It has been an outstanding year for WPP. Our top-line growth, driven by strong demand for our services in digital marketing, media, ecommerce and technology, has resulted in our fastest organic growth for over 20 years. As a result, we are two years ahead of our plan, hitting our 2023 revenue target in 2021.”
He pointed to the expansion of its already major relationships with Coca-Cola and Google as examples of how clients are responding to “the depth, breadth and global scale of our offer – which combines creativity with technology and data”.
There is also growing demand from brands for “purpose”-driven work, according to WPP.
Read added “we look forward to 2022 with confidence” and forecasted growth of about 5% – roughly in line with the other big four agency groups that expect between 4% and 6%.
Geographically, the UK was one of WPP’s best performers in 2021, up 15%. North America lagged on 9.7%, Western Europe was up 14.5% and the rest of the world, including Asia-Pacific and Latin America, up 12.3%.
By discipline, the media and creative agencies (which fall under the umbrella of global integrated agencies in WPP) were up 11.3% (and up 2.5% over two years) and public relations was up 11.5% (and up 7% over two years).
WPP swung to an annual pre-tax profit of £951m in 2021 from a £2.8bn loss in 2020, when it took a big writedown on the historic value of agency brands – partly because of the pandemic slump.
It is understood that the bonus payout is higher than normal but not unprecedented at WPP.
Analysts at Citigroup described WPP’s results as “robust”.
JP Morgan Cazenove added: “We believe agencies can continue to re-rate as they leverage sticky ‘legacy’ relationships to provide advice and execution across an increasingly complex customer journey to support 2% to 4% organic growth in the medium term.”
However, WPP’s shares fell this morning amid wider market jitters sparked by Russian forces' invasion of Ukraine overnight.