Clients including carmakers and consumer goods companies are cutting their advertising spending amid Donald Trump’s tariffs rollout, WPP has said as it reported a 71% slump in profits and a strategic review.
The advertising agency, formerly the largest in the world, cut its global workforce from 111,000 last year to 104,000 as of the end of June as it struggles with weak spending and the rise of artificial intelligence.
WPP’s pre-tax profit dropped by 71% to £98m in the first half of its financial year. It has also halved its interim dividend to 7.5p a share before a strategic review that will be led by its incoming chief executive, Cindy Rose. She will take over from Mark Read on 1 September.
The company warned of slowing spending by ad agencies, which worsened between April and the end of June. “I have never seen a more volatile market,” Read said. “I think a lot of clients are distracted by the macro, tariffs, figuring out what to do.”
Read, who announced his departure in June, leaves WPP in a vulnerable state. Shares in the business have fallen by two-thirds during his tenure, and last year the company lost its crown as the biggest ad agency in the world by revenue as it has struggled to keep pace with its peers and compete with the growing use of AI-generated ad campaigns.
Read added that AI developments meant WPP could probably do its work with “fewer people”. “But at the same time, there will be more work in the future that AI will enable,” he said.
Rose, a top executive at Microsoft, has been on the board of WPP since 2019. At Microsoft she has been responsible for working with large clients to use digital technology and AI for business transformation.
Investors hope her appointment will sharpen WPP’s focus on its AI capabilities. Read said it was “only natural” for a new chief executive to look at the strategy of the company.
WPP has recently lost a series of significant client work, including Coca-Cola’s media business in North America, its two-decade relationship with the US media conglomerate Paramount and Mars’s $1.7bn (£1.25bn) global media planning and buying business.
While WPP has increased its annual investment in AI to £300m, it faces intense competition from big tech companies such as the Facebook owner Meta, which has developed AI tools that allow advertisers to fully create and target campaigns on social media sites. These tools are expected to be rolled out by the end of next year.
after newsletter promotion
Last month WPP cut its forecast of revenues and profits for this year, blaming a challenging economic backdrop, which prompted the shares to drop by 19%. The stock fell by 4.5% in early trading on Thursday and is down by more than half in the year to date.
Reuters contributed to this article.
