WPP PR revenue falls 4.4 per cent in March; 'strong demand' for some PR services

WPP has reported a 1.4 per cent fall in like-for-like revenue in its PR division in the first quarter of the 2020, with a 4.4 per cent decline in March as the coronavirus crisis deepened.

The figures exclude pass-through costs, and WPP said the decline was "mitigated by strong demand for some of our specialist PR services in the current environment".

Overall revenue in the PR division – which includes Burson Cohn & Wolfe, Hill+Knowlton Strategies, Finsbury and Buchanan – fell 1 per cent (excluding pass through costs) to £223m in Q1.

Including pass through costs, like-for-like PR revenue fell 2.9 per cent in Q1 and 7 per cent in March.

The PR division outperformed the rest of the business. Across WPP, like-for-like revenue (excluding pass-through costs) fell 3.3 per cent in the quarter to £2.4bn, with a decline of 7.9 per cent in March.

In the UK, the decline was 4.2 per cent in the quarter and 9.8 per cent in March. The impact was less severe in the US (Q1: -1.9 per cent, March: -3.7 per cent). The largest fall was in Greater China, the first region to be affected by COVID-19 (Q1: -21.3 per cent, March: -29.9 per cent).

WPP said sectors such as automotive, travel & leisure and luxury & premium have seen the "most significant cuts", while spend is "holding up relatively well" in industries such as consumer packaged goods, technology and healthcare & pharma.

The firm stated: "We are seeing continued and, in some cases, greater demand for our public relations, ecommerce, marketing technology and production capabilities."

Last month, the company announced a wide range of cost-cutting and cash-saving measures amid the COVID-19 crisis, include freezing hires, reviewing freelance spending, postponing planned salary increases for 2020 and stopping discretionary costs.

Today, WPP said it had also implemented additional measures, including voluntary salary sacrifice and part-time working.

"Over 3,000 people with salaries above certain levels have already committed to give up 10 to 20 per cent of their salary for an initial three-month period," the company stated.

"While we continue to protect our people as much as possible from redundancy, as well as ensure our ability to serve clients and grow when markets recover, we have had to reduce headcount in certain areas.

"Owing to the flexibility of the cost base, we are able to respond quickly and will reduce cost further if the depth and length of the downturn requires it, as well as ensure the business is ready to take advantage of any market recovery."

Impact

WPP last month withdrew its guidance for the 2020 financial year. The company added today: "We expect the impact of COVID-19 on our business to increase in the short term, but it is not possible to quantify the depth or duration of the impact. We are nonetheless confident that, through our scenario planning, we are well positioned to take further action if the downturn is prolonged and to respond positively when the market picks up."

WPP CEO Mark Read said: "After a good start to the year, with growth outside of China in January and February, our business started to be materially impacted by COVID-19 in March. Our response has focused on four areas: the health of our people, serving our clients, helping to mitigate the impact of the virus on our communities and ensuring WPP is financially strong.

"Close to 95 per cent of our 107,000 people are working from home, providing uninterrupted service to clients, helping them to communicate their own actions, sustain their brands and develop new ways to market their products. We have also won $1bn of new business in the first quarter, including the global integrated Intel account, creative duties for Discover and the media accounts for Hasbro and Novo Nordisk.

"We have witnessed a decade's innovation in a few short weeks, with the way people meet, shop, work and learn increasingly reliant on technology. We are seeing clients rapidly shift emphasis and budget into digital media and direct-to-consumer channels and continue marketing technology investments. And, while many clients are significantly impacted by a reduction in consumer demand, other sectors such as packaged goods, technology and food retail brands have been more resilient. As in previous downturns, those who are most prepared and most far-sighted will be at an advantage when we come through the current situation.

"At a time of great uncertainty, I am very proud of how our people and clients have responded. Despite the economic challenges that will, no doubt, be with us for some time, the way we have come together gives us real confidence in our future."

Meanwhile, the group said it is working with clients, governments, national health organisations and NGOs to help limit the impact of COVID-19 on society.

A team of WPP agencies, for example, is supporting the World Health Organization on a pro bono basis by delivering global and regional public awareness campaigns to encourage people to stay at home and adopt safe behaviours. The partnership involves Hill+Knowlton and Ogilvy among several others.

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