The global advertising landscape faces another significant tremor as WPP, the world’s largest advertising group, cut its 2025 revenue forecast today, citing deteriorating client spending patterns and challenging new business development. The London-based conglomerate now expects like-for-like revenue less pass-through costs to grow between 1% and 2% this year, down from its previous projection of 3%.
The downgrade arrives at a particularly sensitive moment for WPP, which is currently navigating a leadership transition following CEO Mark Read’s announced departure last month. This confluence of factors sent the company’s shares tumbling nearly 7% in early London trading, adding to an already difficult year that has seen the stock decline approximately 18% year-to-date.
“Client spending hesitancy has intensified across several key sectors,” a company spokesperson told me during a morning briefing call. “We’re seeing particularly conservative budget management in technology, consumer packaged goods, and healthcare verticals.”
This marks the second time in eight months that WPP has been forced to reduce its outlook. Last November, the company trimmed 2024 expectations amid what it described as “challenging macroeconomic conditions.” Today’s announcement signals that those headwinds have strengthened rather than abated.
Industry analysts point to several factors behind the spending pullback. Morgan Stanley’s media research team noted in a report shared with Epochedge that “inflationary pressures continue forcing marketing budget constraints” while “economic uncertainty has extended decision-making timelines and reduced campaign scopes.”
The broader advertising sector has struggled to regain solid footing following the pandemic’s disruption. GroupM, WPP’s own media investment arm, recently revised its global ad spending forecast downward for 2025, citing persistent caution among major advertisers.
What makes WPP’s situation particularly complex is the ongoing search for Read’s successor. The outgoing CEO, who has led the company since 2018, took over following the dramatic departure of founder Martin Sorrell. Read’s tenure has been marked by significant restructuring efforts and the streamlining of WPP’s sprawling agency portfolio.
“Leadership transitions create natural uncertainty,” explained Thomas Singlehurst, media analyst at Citigroup. “While WPP has strong operational management in place, clients may be adopting a wait-and-see approach before committing to major new initiatives.”
The company’s reduced forecast comes despite several significant account wins earlier this year, including expanded relationships with Coca-Cola and Unilever. However, these gains have been offset by spending reductions across the existing client base and slower-than-expected conversion of new business opportunities.
WPP’s challenges mirror broader industry patterns. Rival holding companies Publicis and Omnicom have reported similar headwinds, though neither has yet revised their annual outlooks. Interpublic Group maintained its forecast during its quarterly earnings call last week but acknowledged “increased cautiousness” among certain client categories.
The advertising industry’s struggles reflect wider economic currents. Recent Federal Reserve data indicates that while inflation has moderated, persistent price pressures continue affecting corporate planning. The Commerce Department’s latest report shows business investment growing at its slowest pace in seven quarters.
“Marketing budgets are typically among the first areas examined when companies face margin pressure,” said Katherine Carter, chief economist at Barclays Capital. “The current environment of elevated input costs and wage pressures creates a perfect storm for discretionary spending pullbacks.”
For WPP specifically, the revenue forecast reduction raises questions about the company’s ongoing transformation strategy. Under Read, WPP has invested heavily in technology capabilities while divesting certain traditional agency assets. The company has positioned itself as a digital transformation partner rather than merely an advertising service provider.
“The strategic direction remains sound,” insisted WPP’s finance director during today’s analyst call. “But the pace of client adoption has proven more gradual than anticipated in the current economic climate.”
Industry observers expect the advertising market to remain challenging through year-end. The IMF’s recent global economic outlook highlighted “persistent growth headwinds” that will likely continue impacting corporate spending patterns across sectors.
As WPP navigates these difficult waters, the search for Read’s replacement takes on added significance. The board’s choice will signal whether the company intends to accelerate its technological transformation or refocus on core agency operations.
For investors and industry watchers alike, WPP’s forecast reduction serves as a sobering reminder that despite digital advertising’s continued growth, the broader marketing services sector remains vulnerable to economic uncertainty and shifting client priorities.
