LONDON — WPP's PR and public affairs firms reported a like-for-like revenue increase of 0.7% to £1.17bn in 2017, with CEO Sir Martin Sorrell signalling greater agency consolidation following this week's merger of Burson-Marsteller and Cohn & Wolfe.

Sorrell admitted that 2017 "was not a pretty year", after it reported a 0.9 percent drop in net sales and forecast no growth for 2018.

“As our industry continues to undergo fundamental change, we are upping the pace of WPP’s development from a group of individual companies to a cohesive global team dedicated to the core purpose of driving growth for clients.”

Sorrell's comments just days after he announced the reverse takeover of iconic PR firm Burson-Marsteller by Cohn & Wolfe, the latter of which was once again singled out for praise for Sorrell, after a fourth consecutive year of double-digit growth. "Cohn & Wolfe, the group’s specialist public relations and public affairs businesses Glover Park, Ogilvy Government Relations and Buchanan, performed particularly well," said Sorrell.

"I am so proud of our teams around the world that helped fuel this success, and I look forward to bringing the same energy, teamwork and winning spirit to Burson Cohn & Wolfe," added Imperato.

In constant currencies, the Group’s public relations and public affairs businesses were weaker in the second half of the year with constant currency revenue down 0.9% in the third quarter and down 0.8% in the fourth quarter.

Sorrell noted the PR revenues in the UK and the Middle East "grew strongly in the fourth quarter offset by weaker conditions in North America and Continental Europe." Overall operating margins for the PR business fell 0.6 margin points to 16.1% and by 0.4 margin points in constant currency, "as parts of the group’s North American businesses slowed in the second half." 

PR revenues outperformed those from WPP's other business units, except for branding, healthcare and specialist communications, which was up 0.8%.

Rather than blaming the impact of digital platforms like Google and Facebook or increasing competition from management consultants, Sorrell instead pointed to his persistent warnings about client budget cuts in response to activist investors, particularly in the CPG sector.

“In this environment, the most successful agency groups will be those who offer simplicity and flexibility of structure to deliver efficient, effective solutions – and therefore growth – for their clients," said Sorrell. "With this in mind, we are now accelerating the implementation of our strategy for the group. No company in the world of marketing or business transformation has a greater or more varied repertory of talent and capabilities than WPP. Our strength, however, resides not only in the scale and variety of those skills, but in our unique ability to combine them in service of our clients’ growth – which is why most of the world’s leading companies choose WPP to provide them with communications services.

"For many years we have placed ‘horizontality’ at the heart of our strategy by presenting clients with tailor-made and seamlessly integrated offers to meet their specific requirements," added Sorrell. "Over the last year, we have begun to apply that philosophy to the structure of the group itself by simplifying a number of our operations. As our industry continues to undergo fundamental change, we are upping the pace of WPP’s development from a group of individual companies to a cohesive global team dedicated to the core purpose of driving growth for clients.

“As we build an increasingly unified WPP, we are focusing on a number of areas that will allow us to deploy our deep expertise with greater flexibility, efficiency and speed. These include: further simplification of our structure; stronger client co-ordination across the whole of WPP, including greater responsibility and authority for global client teams and country managers; the development of key cross-group capabilities in digital marketing, digital production, eCommerce and shopper marketing; further sharing of functions, systems and platforms across the group; and the development and implementation of senior executive incentives to align them even more closely to group performance."