WPP shows why it's a bad time to be an ad exec

The advertising business isn't getting any easier.WPP, the world's biggest ad agency, disclosed annual earning...

Posted: Mar 1, 2018 4:28 PM
Updated: Mar 1, 2018 4:28 PM

The advertising business isn't getting any easier.

WPP, the world's biggest ad agency, disclosed annual earnings and an outlook for 2018 on Thursday that caused its stock to plunge as much as 15% in London.

CEO Martin Sorrell acknowledged that 2017 had not been "pretty," and his company said it was off to a slow start in 2018. Investors responded by wiping -2.6 billion ($3.6 billion) off WPP's market value.

The conglomerate, which own 400 agencies including Ogilvy & Mather, said that sales will be flat this year, and long term earnings growth could drop as low as 5%.

Sorrell pinned the blame on private equity firms and activist investors that have pressured large companies to cut back on advertising in order to save money.

Ad spending by WPP's biggest clients, which include Ford, HSBC, Unilever and Procter & Gamble, was below average last year and is not forecast to improve.

The advertising industry is also being rocked by a shift from TV and print ads to digital spots, which are cheaper to produce and easy for companies to make without help from an ad agency.

Those trends, combined with major changes in how viewers consume content, are squeezing ad agencies hard.

"Consumers are increasingly intolerant of ads, both on TV and online, and as more viewership goes mobile, consumers are even less likely to accept ad intrusions," analysts at Macquarie wrote recently.

"Better data makes marketing more targeted, but this efficiency also reveals where advertisers can save on spending," they added.

Related: Why the world isn't getting a pay raise

WPP said it would try to improve its prospects by coordinating the work of its multiple agencies better. But layoffs may be coming, too.

"A key focus will be staff costs," warned Liberum analyst Ian Whittaker.

The pain could be felt across the industry. Shares in French advertising agency Publicis Groupe were down as much as 5% in Paris after the warning from WPP.

New York Coronavirus Cases

County data is updated nightly.

Cases: 2085477

Reported Deaths: 52953
CountyCasesDeaths
Kings27746810323
Queens2743149851
Suffolk1995063381
Nassau1823433162
Bronx1814066532
New York1369214455
Westchester1288642268
Erie884341778
Richmond740651812
Monroe668651075
Orange47883810
Rockland46673955
Onondaga38098671
Dutchess29194444
Albany24445350
Oneida22271505
Niagara19704362
Broome18367357
Saratoga15123166
Ulster13777251
Schenectady12999200
Rensselaer11114140
Putnam1054191
Chautauqua8814141
Chemung7560135
Oswego744690
Ontario731192
Steuben6786143
Sullivan655272
St. Lawrence651596
Cayuga622192
Jefferson594267
Wayne566067
Cattaraugus561287
Genesee5357123
Herkimer5110107
Clinton480733
Madison447788
Livingston438158
Fulton434491
Tompkins425051
Montgomery4206123
Columbia4013101
Cortland376660
Tioga370262
Warren359057
Wyoming351752
Allegany344084
Chenango340976
Otsego340247
Greene336977
Washington309155
Orleans305683
Lewis271134
Franklin251812
Delaware232037
Seneca198256
Schoharie166317
Essex157726
Yates116826
Schuyler103314
Hamilton3072
Unassigned11743
Out of NY0237
Utica
Clear
71° wxIcon
Hi: 75° Lo: 44°
Feels Like: 71°
Oneonta
Partly Cloudy
67° wxIcon
Hi: 71° Lo: 43°
Feels Like: 67°
Herkimer
Partly Cloudy
71° wxIcon
Hi: 77° Lo: 45°
Feels Like: 71°
Old Forge
Partly Cloudy
71° wxIcon
Hi: 71° Lo: 40°
Feels Like: 71°
WKTV Radar
WKTV Temperatures
WKTV Severe Weather
Looking for work or looking to hire? Check out the WKTV Job Fair!
Saluting Those Who Are Proud 2 Serve