WPP shares tumble as it slashes revenue forecast as clients cut spend
WPP has called the first half of 2017 “much tougher” than anticipated, reporting a drop in like-for-like revenue and sales. It blamed populist politics in the UK and US, fake news on platforms like Facebook and Google, and short-term thinking in business, for a terrible start to the year.
WPP said in its half-year results released today:
“In the last year or so, growth has become even more difficult to find, perhaps due to increasing social, political and economic volatility, for example with the rise of populism typified by surprise election results in the United Kingdom and the United States and bumpy growth in three of the bigger BRIC countries of Brazil, Russia and China, although India continues to develop rapidly, despite introductions of demonetisation and a General Sales Tax.
“Even the growth of the digital marketplace has been dogged by issues such as measurability, viewability, fraud, and fake news, let alone the duopoly of Google and Facebook and the growing dominance of Amazon in so many spheres, including, but not exclusively, ecommerce, retail, cloud computing and content.
“In a slower growth world, both more recently and post-Lehman, inflation has been negligible, perhaps also suppressed by digital deflation. As a result, clients have markedly less pricing power and finance and procurement departments are very focused on cost. In this world, it is, perhaps, not surprising that clients have reduced spending.”
Shares in WPP tumbled over 11% in early trading on Wednesday 23rd August