Investors pushed WPP’s stock price up 4% on the London Stock Exchange today after the company issued full-year results for last year which included nearly 7% growth, along with guidance of 3% to 5% growth for 2023.
During an earnings call today analysts pressed WPP CEO Mark Read on how the company arrived at this year’s growth guidance and part of his answer was that clients are more optimistic about today’s economy than they were several months ago.
“The economy is in a better place today than people thought it would be three or four months ago,” Read told analysts.
Read also noted that a number of global marketers like Unilever and Coca-Cola have publicly stated intentions to boost investments in marketing this year.
Among WPP’s top-30 clients, Read said that just one had opted to pull back some budget for 2023.
There are also more options for media investments, noted Read, including a growing array of streaming channels, social channels like TikTok and retail media.
On the subject of retail media Read said the company’s focus would remain on helping clients decide how and when to invest but that the firm has largely ruled out returning to the sell side of retail media, which it exited when it sold its specialist unit in that area, Triad. “We’re well equipped to help clients spend investments,” he said. And being on “both sides of the fence,” Read said, was a conflict the firm intends to avoid.
The company is on track in terms of savings due to its streamlining efforts over the past five years. Permanent savings from those efforts will reach $600 million by 2025. Last year those savings amounted to $375 million. Read said contributing factors included a number of internal agency mergers (EssenceMediacom being one example). Simplification efforts have removed 267 legal entities, he noted. Also, travel was down last year by 50% compared to pre-COVID levels.
The addition of local campuses as well as several global IT hubs have contributed to reducing costs.
Experience, Commerce and technology now comprise 25% of the firm’s business, Read said, up from 9% just a few years ago. Programmatic revenues, primarily from Xaxis and Finecast, contributed $2.2 billion in revenues in 2022.
When asked about the value of Kantar, CFO John Rogers estimated it at $4 billion, with about $1.7 billion attributable to WPP, which owns 40% while Bain owns 60%. Read described Kantar as a “hidden gem.” No details yet on when that business might be sold.
