WPP CEO Mark Read Says Company's 15% Organic Revenue Drop in Q2 ‘Better Than Expected’

WPP’s organic revenue fell 15% in the second quarter of this year in large part due to the economic impact of Covid-19, but CEO Mark Read said the holding company has fared better than he initially predicted when the pandemic first took hold. “Our second quarter was slightly better than we had expected, and significantly better than some of the worst-case scenarios that we had looked at back in March,” Read said during WPP’s quarterly earnings call today. “If we had to describe our first half, I’d say we had a resilient performance in a challenging environment.” The holding company, which owns agencies including Grey, GroupM, Mindshare, Ogilvy and VMLY&R, is the latest to report organic revenue declines in the second quarter. Each of its rivals experienced drops as well: IPG’s organic revenue took a 9.9% hit, while Publicis Groupe’s fell 13% and Omnicom’s dropped 23%. According to WPP, the company lost roughly 5,000 employees between June of last year and this year. In its earnings report, WPP pinned the workforce cuts on both layoffs and “voluntary leavers” who have not been replaced due to a hiring freeze the company implemented in March in response to Covid-19. A company spokesperson said that WPP continues to be "very selective" in its hiring. On the call, Read said that 1% of its U.S. workforce has returned to offices, while 3% of its U.K. employees have, following lockdown orders that impacted the majority of its workforce. In the U.S., WPP’s organic revenue declined 9.6% during the second quarter. The U.K. experienced a 23.3% drop. In terms of sectors, WPP said marketing spend from CPG, technology and pharmaceutical companies held up “relatively well” during the first half of this year, while clients in the automotive, luxury and “leisure” space were harder hit by the effects of Covid-19. “This in turn has been reflected in their marketing spend,” the company said in the earnings report. WPP said it’s won nearly $4 billion worth of new business, a figure it calculates by looking at expected client billings for accounts won on an annualized basis, in the first half of this year thanks to wins including WW (formerly Weight Watchers) and Intel. On the call, Read also provided an update on WPP’s cost-savings plan, which was implemented in March to curb the impact of Covid-19 on its business. In addition to a hiring freeze, the company put a stop to “discretionary” costs such as hotels, travel and awards, although it’s unclear which actions are still being enforced and to what extent. At the time, WPP said the cost-cutting measures would generate savings to the tune of $924 million to $1 billion this year. According to WPP, $391 million was saved in the first half of this year, and the company is “on track to deliver towards the upper end” of the aforementioned target. Roughly 25% of these savings are expected to remain moving forward “as a result of new ways of working,” the company said. The earnings come less than a month after WPP released its workforce diversity data in the U.S. as part of a broader plan to fight systemic racism in the industry. The figures revealed that only 2.2% of its senior or executive-level managers are Black. In June, WPP said it plans to spend $30 million over the next three years on “inclusion programs” and antiracism charities. The decision came weeks after the police killing of George Floyd on May 25 in Minneapolis.