WPP shares soar as firms splash cash on advertising

SHARES in WPP raced ahead after it said clients were spending more on advertising as they bounce back from the pandemic.

The ad giant posted revenue growth of 15.7pc in the third quarter, well above forecasts of 9.5pc, and also ramped its full year forecast to 12pc.

Increased spending by clients like L’Oreal helped boost the performance as they look to advertise to women heading to the office and parties once again.

Shares soared 8.1pc, or 77.8p, to 1044p and Mark Read, WPP chief executive, said: ‘Activity has picked up strongly. Cosmetics and consumer goods companies are spending to reach consumers, although travel and tourism are still a bit behind.

‘It’s not quite “the roaring twenties” but business is good.’

During the third quarter, WPP won more work from German pharma giant Bayer and added new deals with Beiersdorf, L’Oreal, Sainsbury’s and TD Bank. The only blip was the loss of the British Airways account WPP had held since 2017, which went to independent agency Uncommon Creative Studio.

The business recorded double digit growth in all of its top markets, including blockbuster growth of 34.5pc in Germany.

Australia was one of the few markets that had failed to recover to 2019 levels, as a result of continued lockdowns.

The results mark a turnaround for WPP which saw revenue fall 10pc last year as it sunk to a £2.8bn loss. Spending dropped sharply during the pandemic as clients cut back on advertising services in order to save costs.

But fears remain that growth is starting to slow again and that consumers are being hit by rising inflation and the possibility of interest rate rises.

Meanwhile, supply bottlenecks have hurt firms across the world. WPP’s outlook shows a modest slowdown in the growth rate in the fourth quarter and Read said spending by car industry clients had been ‘a little bit softer’ as a result of chip shortages.