WPP’s 2022 indicates deeper resilience in the ad market

WPP, the world’s largest agency group by revenue, pulled off a strong 2022 amid deep uncertainty as spending – at least via WPP – remained stable.

Why it matters

Uncertainty does not automatically mean crisis, and ad slowdowns are not being felt equally. WPP’s results suggest that clients are continuing to spend amid economic uncertainty, indicating that agency groups are doing a good job of articulating the growth benefits that marketing brings.

A different story

A lot of the online chatter in recent weeks, surrounded the extent of a secular slowdown in advertising, especially following the Meta and Google results announcements. It may also have a lot to do with muted US performance, and a relatively gloomy budget outlook in the Americas, per WARC’s Headline Index.

Between WPP’s strong results, and recent news from the Trade Desk and Walmart, however, it would suggest that something else is happening: the massive amounts of money that would flow toward Google and Meta now have more places to go, and in the complexity agencies have benefitted from being the ones to guide that spending.

“We’re looking at a much better pattern of client spending than people feared,” said CEO Mark Read in a presentation to investors. “People were fearing a pullback in spend at the end of last year – that hasn’t really happened.”

By the numbers

Like-for-like revenues in 2022 grew 6.7% year-on-year. It’s worth noting that the same metric in 2021 was 12.1% revenue growth. Net revenue growth, however, was up 13.5% YOY to reach £11.8bn.

Unit performance:

• Media was the bright star, with GroupM revenues up 9.1% YOY, thanks to particular strength in commerce media.
• Creative agencies grew 5% YOY
• PR agencies grew 8.2% YOY
• Specialist agencies 5.6% YOY

Regional breakdown

The UK’s 2022 revenue might “surprise a lot of people”, observed Read, as he noted the country, which accounts for 13% of the company’s business, posted 7.6% YOY growth, echoing the total marketing budget growth forecast by the IPA Bellwether survey. In Q4, the Christmas quarter, it managed to post 12% revenue growth year on year.

US revenues, meanwhile, grew 6.7% over the course of the year. However, 3.5% growth for Q4 could be a signal of more difficult times to come for consumers in a market that accounts for 37% of WPP’s business.

China was – on account of a tumultuous Covid-afflicted year – down 3.8% over the year, but with restrictions lifting the company forecasts that it will help drive growth in the coming year. 

Looking ahead

Read is confident: “While there will no doubt be challenges, the continued need for major companies to build brands, sell products, reinvent and transform their business, understand their data, invest in technology and exploit the potential of AI remains, as does their need for modern partners who can help them navigate this new world.”

Sourced from WPP, WARC