- Ad giant WPP's revenue fell 2% in the third quarter on a constant currency basis.
- The company blamed a philosophy of cost-cutting at major clients, driven by the growth of internet retailing, management consultants, and activist investors.
- But WPP said: "Many companies have talked about increasing spend again as volumes growth has been reduced."
ADVERTISEMENT
WPP: 3 factors that make 2017 a 'different kettle of fish' for the advertising industry
Advertising giant WPP has blamed a cost-cutting drive at large companies for a 2% fall in third quarter revenue.
LONDON — Advertising giant WPP has blamed a cost-cutting drive at large companies for a 2% fall in third-quarter revenue, warning that 2017 could be one of the toughest years for the marketing industry since the fall of Lehman Brothers in 2008.
WPP said in its third-quarter results, released on Tuesday, that the industry had bounced back from the financial crisis with a series of record years, but "2017 has, however, been a different kettle of fish, with top-line growth slowing across the industry."
The conglomerate, a bellwether for the advertising and branding industry, said three key factors have combined to push companies to cut costs sharply. They are:
ADVERTISEMENT
- The growth of online retailers:
- Management consultants:
- Distortions from loose monetary policy and the rise of activist investors:
While a philosophy of cost-cutting took hold in 2017, WPP said spending may pick up again next year as sales of consumer goods fall.
"Most experienced package goods executives say, that the alarm bells ring when volumes stagnate or start to tail off and there are fewer users," WPP said. "After reductions in marketing spending in the first half of this year, many companies have talked about increasing spend again as volume growth has been reduced."
WPP shares fell around 0.7% at the open in London:
JOIN OUR PULSE COMMUNITY!
ADVERTISEMENT
Eyewitness? Submit your stories now via social or:
Email: eyewitness@pulse.ng
ADVERTISEMENT