WPP's pre-tax profits plummet by over 70% amid reduced spending from tech and retail clients

In FY 2023, WPP experienced a 4.9% year-on-year growth in its media planning and buying agency GroupM, while its creative line of business saw a decline of 1.6%.

Quarter-on-quarter, the media business saw a growth of 5.7%, whereas the creative business experienced a decline of 3.4% in Q4.

WPP saw a sharp decline in pre-tax profits, dropping by over 70% in 2023, attributed to reduced advertising spending by US tech and retail businesses. The group faced restructuring costs at its global agencies throughout the year, resulting in pre-tax profits falling to £346 million.

While like-for-like sales across the group increased by 0.9%, US sales experienced a significant decline of 4.1% in the final quarter, resulting in a full-year performance of -2.7%. This decline was primarily due to reduced spending in the tech sector, which had a notable adverse impact on the integrated creative agencies.

Conversely, sales in the UK surged, with a 5.1% increase in the final quarter and a 5.6% increase over the year.

In a press statement, WPP said that investing in AI and innovation to deliver improved growth, margin and cash.

Mark Read, Chief Executive Officer of WPP, said, “At our recent Capital Markets Day we detailed our strategy to capture the opportunities of AI, data and technology, while harnessing the full power of our offer to clients, building world-class agency brands, and driving strong financial returns through efficient execution.”

“AI will be fundamental for our business and we are embracing the opportunities that it presents, putting it at the heart of our operations and our work for clients. Our AI-powered platform, WPP Open, is now being used by more than 30,000 people across WPP with growing adoption by our clients,” he added.

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