Advertising ‘industry may be in danger of losing plot’

SHARES in WPP sank yesterday after the firm cut its full-year revenue forecasts amid slowing advertising demand from consumer goods firms.

The advertising giant’s stock plunged over 11% to 1,409p in midday trading after updating the market on its half-year performance.

WPP posted a 1.9% rise in revenue to £7.4bn in the first six months of the year, but like-for-like net sales fell 0.5%.

The company, headed up by Sir Martin Sorrell, said it saw pressure on client spending in the second quarter, particularly in the fast-moving consumer goods sector. As a result, WPP forecasts that full-year like-for-like revenue and net sales will come in between zero and 1% growth.

It had previously pencilled in 2% growth. Current trading is also challenging, WPP added, with all regions except the United Kingdom, Latin America and Central and Eastern Europe showing lower revenue in July compared with the same month in 2016.

The company said “all sectors were down”, with advertising and media investment management and data investment management most affected.

WPP said: “Competition is fierce and as image in trade magazines, in particular, is crucial to many, account wins at any cost are paramount. There have been several examples of major groups being prepared to offer clients up-front discounts as an inducement to renew contracts. Our industry may be in danger of losing the plot.”

Pre-tax profit rose more than 52% to £779m in the period but the tone of the trading update had gloomy prospects.