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.”
Global design and innovation company AKQA has offered its support to regional entrepreneurship initiative, Startup Gippsland. From bushfires to COVID-19 lockdowns, the Gippsland region has had a difficult time in 2020 and AKQA have lent their support by way of judging, sponsoring and offering mentorship to the Incubator Program, designed for early stage entrepreneurs. The […]
Foxtel Media have announced the line-up of heavy hitter brands for FOX CRICKET’s blockbuster summer of cricket which includes India’s Tour of Australia with sets of ODIs and T20I matches, a Test Series and 16 exclusive Big Bash League games. Returning brands include Toyota, McDonalds, Harvey Norman, Western Union and Maytronics. The summer of cricket […]
Putting a certain global pandemic aside and despite its innumerable detractors, television ad spends in Australia were nudging the $4 billion-mark annually before COVID arrived and pummelled the numbers. Putting that in perspective, linear, free-to-air TV in Australia still pulls about one-in-four of every ad dollars spent. Despite the competitive and growing fight for eyeballs […]
Influencers are a key factor in helping Generation Z make beauty purchases, but their influential power drops when it comes to all other women, Are Media’s first BEAUTYVOICES consumer survey has revealed. Sampling beauty products is the most successful form of marketing likely to drive purchase for all women aged 18 to 74, followed by […]
New Zealand’s Anchor Dairy has switched strategies for its 2020 Christmas campaign, with the company this year drawing attention to the need to give during the festive season. The Fonterra-owned company is encouraging Kiwis to fundraise for the New Zealand Food Network, following the release of research that showed one in five people risk going […]
The ‘It’s Your Energy’ campaign, delivered via Icon Agency, encourages Victorians to take advantage of recent energy reforms and ensure they’re getting the best deal possible. Essential Services Commission, the regulatory body for Victorian energy and gas, water, local government, and transport sectors, has engaged Icon Agency to develop an integrated communications campaign to help […]
In the insurance company’s latest campaign, NRMA Sleeper depicts a road trip, like any other, except everyone in the car is asleep, even the driver. Yet they arrive unscathed. According to production company FINCH, which is behind the work, the spot dreams up a world where cars drive themselves to remind us that until they […]
Children’s cancer charity, Bailey’s Day, has teamed up with full-service international communications agency Noisy Beast to launch ‘The Big-Hearted Bear’ campaign, voiced by Channel 9’s Livinia Nixon. Each year, Bailey’s Day hosts a charity golf day, auction and luncheon to raise funds for children’s cancer research at Monash Children’s Hospital, but with the COVID-19 pandemic, […]