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WPP CEO Mark Read underlined the advertising business’ commitment to its technology clients despite citing their lack of spend last year as having weighed down its financial results, as the company reported organic revenue growth of 3.2%, underperforming against its nearest competitors.
The agency network—which owns Ogilvy, GroupM, VML and AKQA—reported revenue for 2023 of $18.81 billion (£14.845 billion) with net new business billings of $4.5 billion (£3.563 billion) and generated a pretax profit of $1.41 billion (£1.113 billion).
Looking ahead, the company forecast organic growth of flat to 1% for 2024.
A tech client downturn
The reason for the flat performance has been placed upon the business’ dependence on technology clients. It is working with three of the largest companies in the sector—Meta, Google and Microsoft—all of which cut their marketing spend considerably last year.
One-fifth of WPP revenues are driven by technology clients, underlining the impact of the sector’s cutbacks in recent months.
“We did not expect the cuts in technology spending that happened throughout the year to take place when we started the year. We saw a continued series of cuts as those companies adjusted their budgets to reflect reality, and maybe they were slow to tell us what they planned. I think it was a surprise to us as we went through the year,” Read admitted.
That decline in ad spend largely impacted the performance of WPP’s creative agencies.
The Super Bowl was a good reminder that creativity is what matters. A race to the bottom of producing work at the lowest possible cost is not going to help brands differentiate themselves.
Mark Read, CEO of WPP
Despite that, Read told ADWEEK that he was not looking to refocus the business away from the technology sector to safeguard against another year when those companies might continue to cost save on marketing.
“In the long run, that will be a real source of strategic and competitive advantage,” Read said of the tech relationships. “We’re not looking to reduce our dependency or diversify away from these companies. We’re committed to them and, in the long run, they are and will continue to be extremely good clients.”
Other new business came through commissions from clients such as Allianz, Krispy Kreme, Mondelēz International, Nestlé, PayPal and Verizon during the fourth quarter.
AI’s impact on WPP
The company has also formed artificial intelligence partnerships with major technology businesses such as NVIDIA in the past year to bolster its technology offering with production and media services, announcing plans to invest £250 million in AI this year alone.
Read did admit that the wide offering of AI-powered services across the advertising sector by WPP and its competitors could confuse clients as they attempt to differentiate between the offers, and WPP needed direct conversations to showcase investments in services such as Satalia in order to show what the business could be capable of.
Discussing OpenAI’s release of Sora—an AI model that can create realistic and imaginative scenes from text instructions—and its potential threat to production services, Read said that the emergence of the capability was no surprise. He added that WPP would need to demonstrate the potential of its own technology soon, citing the videos produced alongside NVIDIA as an example of its own brand-accurate and safe offer.
“That’s a more productive route to go down, albeit Sora is very impressive and it highlights the potential,” he commented, adding his continued belief that the AI would augment human creativity.
“The Super Bowl was a good reminder that creativity is what matters. A race to the bottom of producing work at the lowest possible cost is not going to help brands differentiate themselves. But it will be a tool that we use to help to create work for clients much more cost-effectively,” he said.
WPP Open, the company’s AI-powered platform, is being used by more than 30,000 people across the business while also growing its adoption by clients.
