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WPP’s organic revenue fell in Q3, in large part due to spending pullbacks in the tech sector and economic weakness in China.
Last quarter, its organic revenue fell 0.6% year over year, and it downgraded its 2023 outlook; it expects organic growth between 0.5%–1% this year, down from its previous forecast of 1.5%–3%.
According to the holding company, spending cuts across tech clients contributed to the loss in revenue. “Our top-line performance in Q3 was below our expectations and continued to be impacted by the cautious spending trends we saw in Q2, particularly across technology clients with more impact from this felt in GroupM over the summer than the first half,” CEO Mark Read said in an earnings release.
While markets including Spain, India and the UK performed well, the company experienced declines across North America and China. WPP saw growth in sectors including automotive, healthcare, and CPG, the latter of which increased 14.5% year over year.
WPP won new clients last quarter, including Nestlé, Unilever, Estée Lauder, Hyatt, and Verizon. “Our performance in the third quarter picked up after a somewhat disappointing first half,” Read said.
Its earnings came days after WPP announced that it would be merging two of its agencies, VMLY&R and Wunderman Thompson, to create VML.
WPP is not the only holding company to post lower revenue this quarter: IPG saw a 0.4% drop in organic revenue in Q3. Other holding companies, such as Publicis, Havas, and Omnicom, fared better, posting 5.3%, 4.5%, and 3.3% organic revenue growth, respectively.