British marketing giant WPP overtook long-time rival Omnicom for the first time in 2008 to become the world's biggest marketing group, as well as the most profitable. It has remained the biggest ever since, with gross revenues reaching a record high, in USD at least, of $20.8bn in 2018, helped by the weak pound. Whereas some rivals, like Omnicom and Interpublic, for the most part avoided large acquisitions in the 21st century, WPP continued steadily to expand its portfolio, reinforcing its founder and CEO Sir Martin Sorrell's reputation as one of the industry's most skilled dealmakers. Among the more significant recent additions to the collection were digital advertising network 24/7 Real Media in 2007; global research group TNS, acquired during 2008 after a long and sometimes bitter siege; and top German marketing group Commarco, snapped up in 2011. The group's last $500m-plus acquisition was AKQA in 2012, but it has continued to hoover up smaller businesses around the globe. However, a sharp downturn in profitability in 2017 was followed in early 2018 by an allegation that WPP's creator Martin Sorrell had misused corporate assets, a charge he strenuously denied. With WPP's share price in freefall, Sorrell stunned the global advertising community by resigning from the group he had assembled almost single-handedly over the space of 33 years to launch a new venture, S4 Capital. His successor Mark Read has been struggling since then to turn around the group's weakened performance, partly by consolidating WPP's diverse collection of assets. Several investments and operating businesses were sold, including the controlling stake in global research group Kantar. His most radical move was to merge the ailing J Walter Thompson, Y&R and Grey networks with stronger sister agencies. WPP still owns four of the world's largest advertising networks; now Wunderman Thompson and VMLY&R as well as Ogilvy and what is now AKQA Grey. They are partnered in turn by four global media networks Mindshare, Mediacom, Wavemaker and Essence under the overall banner of GroupM. WPP also controls a substantial portfolio of PR, CRM, design, consultancy and diversified marketing subsidiaries. Net revenues for 2020 were £9.8bn (or $15.4bn in gross revenues), but the cutbacks prompted by the Covid pandemic as well as large impairments resulted in a net loss of £2.9bn. However, WPP took almost everyone by surprise by reporting the best organic growth performance of any of its peers for the first quarter of 2021.
Capsule checked 7th May 2021
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WPP's quarterly organic growth since 2016 (subscribers only)
Who are the competitors of WPP? See ranking of Leading Global Marketing Groups
Adbrands Daily Update 5th Aug 2021: Like its peers, WPP reported a solid rebound in performance in the latest quarter. Like-for-like (ie organic) growth of 19.3% lifted reported net revenues to £2.56bn, more or less equal to the equivalent period pre-Covid in 2019. There were especially strong performances in the UK, India and Canada (all between 30% and 34%), while Italy achieved a staggering 53%. Germany hit 20% and the US 12.6%. The only weak result came from Greater China, with just 1.4% for the latest quarter after very strong growth in Q1. Net revenues for the half were £4.9bn with net income of £353m.
Adbrands Daily Update 30th Apr 2021: No doubt encouraged by its stellar results in Q1, WPP announced that it is withholding further payments due to founder Sir Martin Sorrell under his long-term bonus arrangement. It said that these payouts are suspended as a result of Sorrell's "disclosure of confidential information belonging to WPP and certain of its clients to the media during his tenure as a WPP director". This relates to the bitter war of words between Sorrell and WPP following his resignation in 2018. The withheld bonus is thought to be worth around £500,000. Always one for a witty comeback, Sorrell said it's "just another case of peanut envy" - he has previously described his new group S4 Capital as a peanut compared to WPP, but one that has now grown into a coconut. "It's a bit rich that they're accusing me of leaks, given their own over the last three years. They've had to go back several years to try and find an excuse to deny me what's mine. I've left it to my lawyers to deal with. It seems like blind rage is driving them, not peanut or even coconut envy."
Adbrands Daily Update 28th Apr 2021: WPP took everyone by surprise (not least arch-rival Publicis) with a very strong set of results for Q1 that put it at the top of the organic/like-for-like growth leaderboard for the first time in six years or more. The British group reported like-for-like growth of 3.1% for the quarter, beating Publicis by several points. Its four top markets were all positive, though the amounts ranged from just 0.7% in the US through 2.5% in Germany and 3.9% in the UK to 18.4% in China. Among other markets, India, France and Spain were all modestly negative; Italy, Brazil and especially Russia were strongly positive. Reported revenues for the period were £2.3bn. See charts of all groups' organic performance (subscribers only).
Adbrands Daily Update 11th Mar 2021: WPP's results for 4Q were better than some might have feared, placing the group firmly in the middle of the peer table by organic performance. Like-for-like revenues (WPP's version of other groups' organic revenues) declined by -6.3% in 4Q lifting the annual decline slightly to -8.2%. North America was still weak at -5.7% for Q4; the UK even weaker at -7.5%. Europe as a whole fared better at -3.9%, helped in particular by Germany where the decline was just -0.8%. Asia Pacific lagged behind at -9.8%. Reported net revenues for the year were £9.8bn, but a whopping £3.5bn charge for impairment and restructuring pushed the group into the red with a net loss of £2.9bn. Almost a third of the impairment hit was against Wunderman Thompson. However, there were also a few nuggets of positivity, not least growth in 4Q for VMLY&R - increasingly the star network within the group - with LFL of 2.9% in 4Q. Also, Russia was virtually the only major market to show not only positive growth for 4Q - of 5.3% - but also the year as a whole at 2.9%.
Adbrands Daily Update 14th Jan 2021: WPP scored a significant coup by poaching widely admired creative leader Rob Reilly to become its new global chief creative officer, filling shoes left empty since John O'Keeffe departed last year. Reilly will take up that role in May, moving from McCann Worldgroup where he has been creative chairman since 2014. Previously he spent a decade at Crispin Porter & Bogusky when that agency was at its peak. WPP said in a statement that Reilly will work with CEO Mark Read and the leadership of WPP's individual agencies to "champion creativity within and beyond the company, fostering a culture that delivers extraordinary work to WPP's clients. He is also tasked with attracting and nurturing the best creative talent, driving inclusion and diversity in creative work and teams, and working with technology partners to fuel the creativity needed for their platforms."
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