By Sarah Young
LONDON (Reuters) -Clients are spending less on advertising due to tariffs, WPP warned on Thursday, as it halved its interim dividend following big client losses to rival Publicis, showing the scale of the challenge faced by incoming CEO Cindy Rose.
The British ad group, whose agencies include Ogilvy, VML and WPP Media, named Microsoft executive Rose as its new boss last month, days after it downgraded forecasts, blaming the loss of big accounts and the timing of business for a dire June.
Rose has a difficult road ahead. While all advertising agencies are trying to stay relevant in the world of AI, which gives clients the tools to create and manage their own campaigns, WPP is faring worse than France’s Publicis.
Since losing its crown as the world’s biggest ad group to Publicis last year, WPP has lost the Mars and Paramount accounts and some business from Coca-Cola to Publicis, prompting the French group to lift its financial guidance.
Shares in WPP were down 2.5% in mid-morning deals, having earlier sunk to their lowest level since 2009. The stock has lost over 50% of its value in the year to date.
“At one time WPP was considered a bellwether for the wider economy … however, it is now so consumed by its own problems this wider relevance has diminished,” AJ Bell head of financial analysis Danni Hewson said.
CEO Mark Read, who hands over to Rose on September 1, said it was not the case that clients were deserting WPP.
“Our industry is characterised by major pitches and some we win, like Amazon or Unilever, and others we’re not successful,” he said in an interview. “We have to look at business over a period of time.”
He said the phasing of business which caused declines in June was due to “one-off factors”, but warned the general environment was tough.
“I think a lot of clients are distracted by the macro, tariffs, figuring out what to do,” he said, noting that consumer goods companies and carmakers were particularly affected.
For the second quarter, WPP reported a 5.8% drop in underlying net sales, but said it was on track to meet its downgraded 2025 guidance for a fall of 3% to 5%.
Its half-year reported operating profit dropped 48% to 221 million pounds ($295 million) and it also announced an interim dividend of 7.5 pence per share, half the level of a year earlier. The new CEO will review strategy and future capital allocation policy, WPP added.
($1 = 0.7481 pounds)
(Reporting by Sarah Young. Editing by Catarina Demony and Mark Potter)
