WPP Slashes Profit Forecast as Client Spending Drops

WPP, the world’s largest advertising holding company, has sharply cut its profit and revenue forecasts for 2025 as it faces a tough economic climate, shrinking client budgets, and a slowdown in new business wins. The move comes at a pivotal time for the company, which is also searching for a new CEO and restructuring its global operations.

Why Is WPP Cutting Its Forecast?

WPP now expects its like-for-like revenue (excluding pass-through costs such as media buying) to decline by 3% to 5% in 2025, a significant downgrade from its earlier guidance of flat to a 2% drop. The company’s headline operating profit margin is also projected to fall by 50 to 175 basis points year-on-year, reflecting the impact of lower revenues and ongoing macroeconomic uncertainty.

This revision follows a disappointing second quarter, with revenue less pass-through costs falling by 5.5% to 6%—worse than both the first quarter and previous expectations. For the first half of 2025, WPP anticipates a revenue decline of 4.2% to 4.5%, and operating profit is expected to be in the range of £400 million to £425 million, down from last year and translating to a margin drop of 280 to 330 basis points.

What’s Causing the Downturn?

Reduced client spending is the main culprit. Many of WPP’s major clients are tightening their marketing budgets in response to persistent inflation, economic volatility, and a generally challenging trading environment. The company has also experienced a decline in new business wins, with fewer major account wins than anticipated.

The situation has been aggravated by the loss of several high-profile accounts:

• In June, Mars moved its $1.7 billion global media account from WPP to French rival Publicis.
• Earlier, WPP lost Coca-Cola’s $700 million North American media account and saw Paramount end its 20-year relationship with the agency.

These losses have further eroded WPP’s revenue base and contributed to the downward revision.

Leadership Uncertainty and Restructuring

The profit warning comes amid a period of significant change at WPP. CEO Mark Read, who has led the company since 2018, is stepping down by the end of the year. The group is also undergoing a major leadership shuffle and has dissolved its flagship media agency, GroupM, as part of a broader restructuring effort.

WPP is taking steps to manage costs, including job cuts at WPP Media, which are expected to save over £150 million annually. The company hopes these actions will help stabilize margins in the second half of the year, but the overall outlook remains cautious.

Industry-Wide Challenges

WPP’s struggles reflect broader challenges in the global advertising industry. Agencies everywhere are grappling with slower client spending, persistent inflation, and uncertainty about the economic outlook. Many clients are delaying or reducing marketing investments, and competition for new business remains fierce.

What’s Next for WPP?

WPP’s leadership says the focus remains on balancing long-term investment with cost control and responding swiftly to market changes. The company is set to report its Q2 results on August 7, which will provide more details on its financial performance and strategic direction