- UK advertisers cut back on marketing spend on budget concerns
WPP secured a major contract with tech giant Amazon during the third quarter thanks to its recent adoption of artificial intelligence tools, the advertising group said on Wednesday.
The group told investors that WPP Open – its AI-powered marketing operating system – was ‘central to our successful pitch at Amazon’ for media services outside the Americas, with the US firm particularly impressed by its ‘media studio’ function.
WPP, which has invested £250million in ‘AI-driven technology’, also notched up contract wins with Unilever and chemicals group Henkel during the quarter.
WPP achieved like for like revenue before pass-through costs growth of 0.5% to £2.77bn during the third quarter, thanks to growth in North America and Western Continental Europe
Boss Mark Read said: ‘Our success with two of the world’s top ten advertisers demonstrates the renewed competitiveness of our offer.
‘Our people are increasingly embedding AI in the way that we work and deliver creative and media campaigns to clients, with usage of WPP Open up 107 per cent since the beginning of the year.’
WPP revenue before pass-through costs rose by a slightly better than expected 0.5 per cent on a like for like basis to £2.77billion during the period, with North America and Western Continental Europe delivering growth of 1.7 and 2.2 per cent, respectively.
But it suffered ‘a continued decline in China’, where sales slumped 21.3 per cent, while UK revenues also stalled.
Companies slash marketing spend
The IPA Bellwether Report, which tracks UK companies’ marketing intentions, showed 21.6 per cent of advertisers increasing marketing budgets in the third quarter – but an identical proportion said they were cutting marketing budgets.
Paul Bainsfair, IPA director general, said: ‘Negative hype surrounding the impending Budget has no doubt created choppy waters for UK companies and their marketers to navigate.’
WPP shares were up 3.8 per cent to 803.2p by mid afternoon on Wednesday, bringing one-year gains to 15.4 per cent.
Analysts at Shore Capital Markets said: ‘Although WPP’s recent trading performance has lagged the industry leaders, this morning’s statement shows signs of improved momentum and the group remains a leading global player with a deep skill set, broad offering and an enviable blue-chip client base.
‘We believe that these factors mean that it should be well-placed to capitalise on medium-term growth in advertising / marketing spend with the sale of FSG Global strengthening an already robust financial position.
‘We therefore maintain our long-term buy recommendation although a short-term catalyst for sustained share price improvement remains elusive.’
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