The world’s largest advertising and marketing services group, WPP, has said last year was its worst year since the 2009 recession.
The UK company reported a 0.3% fall in revenues to £15.2bn in its results for 2017, making it WPP’s worst year in growth terms since 2009 when the company reported a fall of 8.1% during the depths of the recession following the credit crunch.
WPP’s share price fell more than 10% in early trading on Thursday, the biggest faller on the FTSE 100.
Sir Martin Sorrell, WPP’s chief executive, admitted 2017 “was not a pretty year” for the company but denied it was because his agencies were being cut out of deals between advertisers and Google and Facebook.
The tech companies account for almost 60% of the £19.7bn UK internet market and hoover up as much as 90% of all new money coming in. However, Sorrell said advertisers were still using his agencies to spend money with the technology companies, and were not cutting them out by doing direct deals.
Sorrell, one of the UK’s highest-paid chief executives, who took home £48m in 2016, previously said that WPP spent more than $6bn (£4.4bn) of its clients’ advertising and marketing money with Google, its biggest single investment, last year. Facebook received about $2.5bn of its ad spend last year.
“The major factors influencing [WPP’s] performance were probably the long-term impact of technological disruption and more the short-term focus of zero-based budgeters, activist investors and private equity,” he said.
Zero-based budgeting is a marketing strategy where a company starts with a clean slate each year, rather than taking the previous year’s advertising spend as a benchmark.
WPP saw pre-tax profits rise 7.7% to £2.1bn last year. But the company indicated that this year there would probably be job cuts among its 130,000 global staff.
WPP needed to put a “continued emphasis on balancing revenue growth with headcount increases and improvement in staff costs”, it said.
Staff costs climbed from £7.78bn to £8.3bn last year, with more than £320m paid out in cash and share-based performance bonuses.