WPP Unveils Q3 Profit Drop & Takes A Swipe At The Consultancies “Changing The Industry”

WPP Unveils Q3 Profit Drop & Takes A Swipe At The Consultancies “Changing The Industry”
SHARE
THIS



The world’s biggest advertising group, WPP, has revealed its global net sales in the third quarter of 2017 fell 1.1 per cent meaning revenues were flat and it would have to reduce its profit margin targets.

Announcing the results at its AGM in the UK yesterday, the group also warned shareholders that it was facing “a changing industry” because of new players and changing client behaviour.

The Asia-Pacific – in which Australia is lumped – fell a worrying 4.5 per cent in the third quarter and is down 1.5 per cent in the year to date.

It believed three factors were in play for its profit downgrade – the rise of the consultancies, tighter client budgets and, of course, Facebook and Google.

WPP supremo, Sir Martin Sorrell (main picture), had already warned that 2017 would be the company’s worst in a decade.

In a statement, WPP said: “For certain, the advertising and marketing industry has had a good run for the last seven years since the Lehman crisis of September 2008, and a very weak year in 2009, with your company experiencing a V-shaped recovery in 2010 and sequentially record years from 2011 onwards until 2016.

“2017 has, however, been a different kettle of fish, with top line growth slowing across the industry. What may have brought about this significant shift, which seems to have started almost in the first quarter of this year?

“It does seem that in the new normal of a low growth, low inflation, limited pricing power world, there is an increasing focus on cost reduction, exacerbated by a management consultant emphasis on cost reduction and the close to zero cost of capital funding of activist investors and zero-based budgeters,” WPP said.

When it came to the consultancies – the likes of Deloitte and Accenture – increasingly attempting to cut creative agencies’ grass, WPP agreed they were buying-up smaller agencies and soaking up talent.

Sir Martin himself telling the BBC Today programme yesterday: “Consultancies are going to clients and suggesting they are spending too much, not just on marketing, but generally.”

Sorrell added that with a globally flat sharemarket, investors were also demanding that companies cut costs which often meant significant cuts to marketing and advertising budgets.

When it came to the consultancy businesses, the WPP report noted: “Most agencies report, including ourselves, that even when they do compete directly with the consultancies on digital projects, the win/loss records are consistently strong, particularly given the continuing importance of the creative dimension for success.

“Where the consultancies may have made some inroads is their focus not so much on the digital area, but more importantly on client concerns about cost. Very few CEOs will resist the suggestion that they may be overspending and the promise of an audit or review that will only cost a proportion of any cost savings generated or a contingency fee,” the report said. “So, it may well be, that consultant activity is having some impact, not so much in the digital area, but more because of an emphasis on cost containment.”

 

 

Please login with linkedin to comment

Latest News

Hurry! B&T 30 Under 30 Entries Closing Friday!
  • Advertising
  • Marketing
  • Media

Hurry! B&T 30 Under 30 Entries Closing Friday!

This is a clarion call for B&T 30 Under 30 entries, although it's probably more mariachi band than angelic harbinger.

by B&T Magazine

B&T Magazine
The Hit Network Chooses Comedian Tanya Hennessy To Host Weekend Breakfast
  • Media

The Hit Network Chooses Comedian Tanya Hennessy To Host Weekend Breakfast

Southern Cross Austereo’s Hit Network has announced that rising radio star and comedian Tanya Hennessy will take over hosting duties for its weekend breakfast slot in 2018. Hennessy will bring content to the airwaves each Saturday and Sunday morning from 7am to 9am with a regular rotation of guest co-hosts. The self-described talker, not walker […]

Straight Up PR Wins Five New Clients
  • Marketing

Straight Up PR Wins Five New Clients

Health, wellbeing and lifestyle PR agency Straight Up PR has welcomed Changing Habits, Unichi Wellness, enerGi, SleepX, and Healthie Hampers to its client portfolio. Straight Up PR’s projects will include bespoke PR services and influencer marketing packages specifically focusing on communications strategy and execution, media and influencer relations, PR launch events, product seeding and gifting, […]

March One Creates ‘Cheese For Change’ Fundraising Campaign For White Ribbon Australia
  • Advertising
  • Campaigns
  • Marketing

March One Creates ‘Cheese For Change’ Fundraising Campaign For White Ribbon Australia

Independent creative agency March One has developed a new fundraising event for White Ribbon Australia that turns a social moment into a social movement. Starting on Thursday 22 March and going until Sunday 25 March, Cheese for Change will ask Aussies to create a cheese platter that matters by gathering friends, family or co-workers together […]

Sixth Annual IGN Select Awards Winners Announced
  • Marketing

Sixth Annual IGN Select Awards Winners Announced

The winners of IGN Australia’s sixth annual Select Awards were revealed during a huge special event at the Australian National Maritime Museum in Sydney on Friday, February 16. Some 225 Media & Game Publishers alongside 320 IGN Community Gamers attended the annual event. 2017 was absolutely crammed with terrific games and several categories were extremely tightly-contested. The top […]

Meet Your Mentors For B&T Bootcamp 2018!
  • Advertising
  • Marketing
  • Media

Meet Your Mentors For B&T Bootcamp 2018!

When it comes to an industry "who's who", you'll find there won't be too much who-ing with this impressionable lot.

by B&T Magazine

B&T Magazine
ANZ Unveils Its 2018 GAYTMs
  • Marketing

ANZ Unveils Its 2018 GAYTMs

Mardi Gras is only weeks away and B&T has already hoisted the mirror ball and donned the hotpants to bring you this.

International Creative Services Redesigns Business Model To Broaden Talent Offering
  • Advertising
  • Marketing
  • Media

International Creative Services Redesigns Business Model To Broaden Talent Offering

Marketing consultancy International Creative Services has announced a new roster of diverse creative and production talent to provide a fully integrated solution for advertising and branded content. The roster includes a broad range of global and local directors, animators, illustrators, motion designers, visual artists, light projectionists, photographers and cinematographers – many of whom Australia will […]

Dirty Data Done Dirt Cheap
  • Opinion

Dirty Data Done Dirt Cheap

Does the mere thought of data fog the brain and stuff the sinuses? Decongest immediately with this lozenge-like read.

Opinion

by B&T Magazine

B&T Magazine
Johnny Ruffo & Lynne McGranger Host Emotive’s New Video Series For HelloFresh
  • Campaigns
  • Marketing

Johnny Ruffo & Lynne McGranger Host Emotive’s New Video Series For HelloFresh

HelloFresh Australia, together with content agency Emotive, have launched a new video content series hosted by Home & Away actress Lynne McGranger and entertainer Johnny Ruffo. Dinner Diaries showcases the talent eating their way across the country as they drop into HelloFresh customers’ homes to see what the nation are cooking at dinnertime. The campaign […]

AppNexus Appoints VP Of Diversity, Inclusion & Community Experience
  • Advertising
  • Technology

AppNexus Appoints VP Of Diversity, Inclusion & Community Experience

Independent advertising technology company AppNexus has announced the appointment of Antoinette Hamilton as its vice president of diversity, inclusion and community experience. Filling a new position at the company, Hamilton (pictured above) will spearhead initiatives to promote a diverse and inclusive global community within AppNexus, broaden the range of the company’s talent pipeline, and drive […]

Mango Melbourne Appoints New Head Of Comms
  • Advertising
  • Marketing

Mango Melbourne Appoints New Head Of Comms

If you were to lick your computer monitor while reading this Mango story, it may actually taste like a computer monitor.

by B&T Magazine

B&T Magazine
Pac Mags Appoints Sales Leadership Team
  • Media

Pac Mags Appoints Sales Leadership Team

Look, it's not one but two positive stories about the magazine industry today! You wouldn't read about it, would you?

by B&T Magazine

B&T Magazine
Three Ways To Propel Your Career Now
  • Advertising
  • Marketing
  • Media

Three Ways To Propel Your Career Now

Need a career kick-start without having to wear a feather boa and shake maracas about the office? Read this and pronto.

by B&T Magazine

B&T Magazine
Aussie Cycling Label Attaquer Launches New Racing Kit Via SPLINTR
  • Campaigns
  • Marketing

Aussie Cycling Label Attaquer Launches New Racing Kit Via SPLINTR

Cult Australian cycling label Attaquer approached SPLINTR to present its new Race Ultra+ Collection to the world, and just 24 hours after the brand film launched, the kit was sold out. Attaquer’s new cycling kit aimed to attract not only its current core customer, but also the extreme performance-driven end of the market. Stevan Musulin, […]