WPP's profits plummet 71% as clients slash ad and marketing spending, dividend halved.

WPP, an advertising and marketing giant, reported a 48% drop in first-half operating profits and a 71% decline in pre-tax profits. Revenues fell 8% to £6.66 billion, with a 16.6% decline in China and a 6% drop in the UK. The company halved its interim dividend to 7.5p and expects like-for-like revenues to be 3-5% lower for the year, with a headline operating profit margin down 50-175 bps.

WPP, a global advertising and marketing giant, reported a challenging first half of 2025, with a 48% drop in operating profits and a 71% decline in pre-tax profits. The company's revenues fell 8% to £6.66 billion, with significant declines in key markets such as China and the UK. The interim dividend was halved to 7.5p, and the company expects like-for-like revenues to be 3-5% lower for the year, with a headline operating profit margin down 50-175 bps [1].

The London-headquartered company, which owns brands like Ogilvy and Burson, saw its first half revenues fall nearly 8% to £6.66 billion in the six months to end June. The decline was mainly due to a slowdown in new business and reduced client spending. The company's top 25 clients' revenue held broadly flat, with only 0.1% like for like growth in the first half [1].

One of the most significant declines was seen in China, where revenues fell by 16.6%, followed by a 6% drop in the UK and a 5.5% decrease in western Europe. North America saw a more modest 2.4% decline. These regional disparities highlight the varying impacts of economic conditions and market dynamics across different geographies [1].

WPP's new CEO, Cindy Rose, who previously served as the boss of Microsoft UK, will take over in September. The appointment comes as the company undergoes a strategic review and is expected to bring a new perspective to address the current challenges. The company has also been making efforts to reposition its media arm, simplify its organizational model, and reduce costs [1].

To offset the financial challenges, WPP has implemented cost-saving measures, including a 3.7% headcount reduction, which is expected to generate annual savings of over £150 million from 2026. Additionally, the company has been investing in data and technology capabilities through acquisitions and new product launches, such as InfoSum and Open Intelligence [1].

Spotify, another major player in the advertising sector, also faced challenges in its second quarter 2025 earnings. Despite strong subscriber growth, Spotify's ad-supported revenue fell 1% year-over-year to €453 million. The company attributed the decline to execution challenges in its ad business transformation and highlighted the potential of its programmatic business. Spotify's advertising challenges reflect broader industry trends towards programmatic automation and measurement standardization [2].

Looking ahead, WPP expects to face a challenging year, with like-for-like revenues expected to be 3-5% lower than 2024. The company's headline operating profit margin is projected to be down 50-175 bps year-on-year. However, the appointment of a new CEO and ongoing strategic reviews provide a potential pathway for recovery and growth in the future.

References:
[1] https://ca.finance.yahoo.com/news/wpp-profits-slump-dividend-halved-064942898.html
[2] https://ppc.land/spotify-advertising-faces-challenge-as-q2-revenue-drops-1-year-over-year/