WPP Q1 Revenue Dips, Tariffs Threaten Ad Spending

WPP Q1 Revenue Dips, Tariffs Loom Over Ad Spending

WPP reported a 2.7% decline in Q1 2025 revenue less pass-through costs, a key metric of agency health, totaling £2.48 billion (approximately $3.2 billion). Total reported revenue slid 5% year-over-year, or 0.7% like-for-like, reaching £3.2 billion. The results align with internal forecasts, and WPP maintains its full-year projection of flat to negative growth, anticipating improvement in the second half.

Tariff Uncertainty Impacts Client Spending

GroupM, WPP's media-buying arm, saw a 0.9% decline, while other global integrated agencies dropped 4.4%. Significant regional pullbacks contributed to the decline, notably a 17.4% drop in China. While WPP hasn't observed substantial shifts in client spending due to tariffs yet, CEO Mark Read acknowledged the potential impact.

“While WPP isn't directly affected by tariffs, they will undoubtedly impact many of our clients and how they prioritize their margin investments in advertising and promotion," Read stated in an analyst call. Read the full transcript.

Like other advertising executives, Read noted that marketers have adapted to navigating periods of uncertainty, citing the pandemic, the war in Ukraine, and inflation. He anticipates an "asymmetric" impact of tariffs on clients, with some facing significant disruptions to product costs while others experience less severe effects.

Responding to analyst inquiries, Read dismissed the notion of a Q1 spending "pull forward" from sectors like automotive facing tariff uncertainty. While some brands have increased marketing to encourage purchases before potential price hikes, Read doesn't see this as a significant factor.

WPP's Ongoing Challenges and Initiatives

Despite the challenges, WPP secured wins in Q1, including expanded work with Heineken encompassing global shopper marketing and commerce. The acquisition of InfoSum strengthens GroupM's data-driven capabilities and AI initiatives. WPP continues to prioritize the adoption of its Open operating system.

However, GroupM, despite restructuring efforts, faces ongoing challenges, including legacy client losses and market softness in regions like China. Recent reports also highlight internal challenges related to WPP's return-to-office policy.