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LONDON — WPP's PR and public affairs firms which include H+K Strategies, Burson-Marsteller and Finsbury, outperformed the holding group's other units during Q1 of 2017, growing revenue by 4.4% on a like-for-like basis to £291.7m.
Unlike recent quarters, furthermore, WPP CEO Sir Martin Sorrell highlighted the performance of a number of his PR firms. "All regions and sub-regions were up, with particularly strong growth in the US, UK, Western Continental Europe and the Middle East," he said.
"Cohn & Wolfe performed strongly, especially in the US, driven by consumer and healthcare spending, together with H+K Strategies in Europe, Africa & the Middle East, Ogilvy Public Relations in North America, Europe, Africa & the Middle East and the specialist public relations and public affairs businesses, Glover Park, Hering Schuppener, Ogilvy Government Relations and Buchanan."
WPP's dominant unit, advertising and media, was up 0.2% on a like-for-like basis, while data investment management declined 3.4%. Branding, healthcare and specialist comms grew by 1.4%.
“Cohn & Wolfe’s journey from traditional to integrated communications is paying off," added Cohn & Wolfe CEO Donna Imperato. "We are entering our fourth year of double digit growth, having grown 10% in the first quarter this year. I’m thankful that we had the foresight seven years ago to begin evolving into an agency that crosses disciplines and we now find ourselves with more marketing spend on the client side."
Sorrell admitted that 2017 has started more slowly for the group, with continuing geopolitical concerns, although he sounded a very pro-Trump note in his comments, pointing to an adminstration "which is much more strongly pro-business," than the Obama administration, despite the lack of progress during the US President's first 100 days.
Global concerns, he said, continue to challenge client spend. "As a result, there remains considerable focus on the short-term and cost and the finance and procurement functions are dominant, certainly equal or more powerful than marketing, rightly or wrongly, and the siren calls of consultants suggest cost based solutions."
This is not the first time that Sorrell has suggested clients are more focused on cost-cutting that brand building, thanks to the pressures of tech disruption, zero-based budgeting and activist investors. These pressures have intensified recently, in the last three to six months with a perfect storm being created by this trifecta of forces, reflected, for example, in the significant psychological impacts of the aborted Kraft Heinz bid for Unilever and the Trian investment in Procter & Gamble. And these winds are unlikely to shift or abate until interest rates return to more normal historical levels."
Once again, Sorrell also noted that "corporate structures that seem to offend customary good corporate governance" — such as "the Murdochs’ Newscorp and Fox or the Roberts’ Comcast or Zuckerberg’s Facebook or Brin & Page’s Google or Bezos’ Amazon or, now, Spiegel’s Snap" — "may deliver better long-term results."
The marketing communications world, added Sorrell, faces similar pressures, with the "industry in danger of losing the plot" as it chases account wins at heavily discounted rates.
"Competition is fierce and as image in trade magazines, in particular, is crucial to many, account wins at any cost are paramount," he said. "There have been several examples recently of major groups being prepared to offer clients up-front discounts as an inducement to renew contracts, heavily reduced creative and media fees, extended payment terms, unlimited indirect liability for intellectual property liability and cash or pricing guarantees for media purchasing commitments, even though the latter are difficult for procurement departments to measure and monitor. As some say, you are only as strong as your weakest competitor. These practices cannot last and will only result eventually in poor financial performance and further consolidation, the premium being on long-term profitable growth."
"Once you accept benchmarking as a means of evaluation you become a cost and are viewed as a source of funding or insurance, rather than an investment or value added and recent industry results have reflected this increased pressure and inconsistencies. Some are storing up problems for the next generation of management."
Unlike recent quarters, furthermore, WPP CEO Sir Martin Sorrell highlighted the performance of a number of his PR firms. "All regions and sub-regions were up, with particularly strong growth in the US, UK, Western Continental Europe and the Middle East," he said.
"Cohn & Wolfe performed strongly, especially in the US, driven by consumer and healthcare spending, together with H+K Strategies in Europe, Africa & the Middle East, Ogilvy Public Relations in North America, Europe, Africa & the Middle East and the specialist public relations and public affairs businesses, Glover Park, Hering Schuppener, Ogilvy Government Relations and Buchanan."
WPP's dominant unit, advertising and media, was up 0.2% on a like-for-like basis, while data investment management declined 3.4%. Branding, healthcare and specialist comms grew by 1.4%.
“Cohn & Wolfe’s journey from traditional to integrated communications is paying off," added Cohn & Wolfe CEO Donna Imperato. "We are entering our fourth year of double digit growth, having grown 10% in the first quarter this year. I’m thankful that we had the foresight seven years ago to begin evolving into an agency that crosses disciplines and we now find ourselves with more marketing spend on the client side."
Sorrell admitted that 2017 has started more slowly for the group, with continuing geopolitical concerns, although he sounded a very pro-Trump note in his comments, pointing to an adminstration "which is much more strongly pro-business," than the Obama administration, despite the lack of progress during the US President's first 100 days.
Global concerns, he said, continue to challenge client spend. "As a result, there remains considerable focus on the short-term and cost and the finance and procurement functions are dominant, certainly equal or more powerful than marketing, rightly or wrongly, and the siren calls of consultants suggest cost based solutions."
This is not the first time that Sorrell has suggested clients are more focused on cost-cutting that brand building, thanks to the pressures of tech disruption, zero-based budgeting and activist investors. These pressures have intensified recently, in the last three to six months with a perfect storm being created by this trifecta of forces, reflected, for example, in the significant psychological impacts of the aborted Kraft Heinz bid for Unilever and the Trian investment in Procter & Gamble. And these winds are unlikely to shift or abate until interest rates return to more normal historical levels."
Once again, Sorrell also noted that "corporate structures that seem to offend customary good corporate governance" — such as "the Murdochs’ Newscorp and Fox or the Roberts’ Comcast or Zuckerberg’s Facebook or Brin & Page’s Google or Bezos’ Amazon or, now, Spiegel’s Snap" — "may deliver better long-term results."
The marketing communications world, added Sorrell, faces similar pressures, with the "industry in danger of losing the plot" as it chases account wins at heavily discounted rates.
"Competition is fierce and as image in trade magazines, in particular, is crucial to many, account wins at any cost are paramount," he said. "There have been several examples recently of major groups being prepared to offer clients up-front discounts as an inducement to renew contracts, heavily reduced creative and media fees, extended payment terms, unlimited indirect liability for intellectual property liability and cash or pricing guarantees for media purchasing commitments, even though the latter are difficult for procurement departments to measure and monitor. As some say, you are only as strong as your weakest competitor. These practices cannot last and will only result eventually in poor financial performance and further consolidation, the premium being on long-term profitable growth."
"Once you accept benchmarking as a means of evaluation you become a cost and are viewed as a source of funding or insurance, rather than an investment or value added and recent industry results have reflected this increased pressure and inconsistencies. Some are storing up problems for the next generation of management."
