By Paul Sandle
LONDON (Reuters) -WPP said its clients were waiting to see how damaging tariffs become before deciding whether to change their budgets, limiting the impact of the tensions between the United States and China on its trading for now.
The trade war between the world’s two biggest ad markets has escalated, with President Trump imposing taxes of up to 145% on Chinese goods and Beijing hitting back with a 125% tariff.
There are signs, however, both sides are worried about the economic damage and are seeking a resolution.
Chief Executive Mark Read said tariffs would affect the broader economy, but unless customers retreat, WPP would stick to its full-year guidance.
The operating environment remained “very uncertain and very challenging,” he said on Friday.
“There are scenarios where the tariff situation gets worse, and there are scenarios where it gets much better,” he said.
“And I think in response to that, (clients) are tending to continue as they are for the moment and see how things unfold.”
WPP, the owner of agencies GroupM, Ogilvy and VML, had predicted a tough year in February, when it said growth would be flat at best and down 2% at worst.
On Friday, it said its revenue less pass-through costs fell 2.7% to 2.48 billion pounds ($3.29 billion) on an underlying basis in the first quarter.
Its shares fell 0.5%.
Read said a number of brands were returning to Elon Musk’s X. “The team at X are working hard to try to increase spending and make the platform more attractive to brands,” he said.
WPP, which counts Unilever and Ford among its major clients, has lost ground to Publicis. Its French rival recorded growth of 4.9% in the quarter.
The other two of the “big four”, U.S. groups Omnicom and Interpublic, which are merging in a $13 billion deal, had diverging fortunes in the quarter.
Omnicom missed forecasts as uncertainty weighed, but a sound underlying performance delivered a beat for Interpublic.
($1 = 0.7533 pounds)
(Reporting by Paul Sandle; editing by Sarah Young and Barbara Lewis)
