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British advertising titan WPP released its financial results for the first half of 2021 today, revealing a faster-than-expected return to growth in line with its rivals’ performance. Here we consider the most important elements of the holding company’s results.

Recovery faster than predicted

  • The holding company reported H1 revenue increasing 9.8% to £6.1bn; that’s a like-for-like increase of 16.1% on the same period last year. Its operating profit for H1 increased 54.4% compared to last year, to £590m; its operating margin rose 3.9% to 12.1%.

  • That puts it ahead of holding company rivals. Publicis recorded €4.9bn (£4.1bn), Omnicom posted $6.9bn (£4.96bn) and IPG $4.3bn (£3.09bn) in their respective first-half results.

  • With WPP ’confident’ of further growth in the second half of the year, the company says it expects to reach its 2019 status quo a year ahead of plan.

  • Chief executive officer Mark Read said: “I’m delighted with our performance in the first six months of the year, at a time when Covid-19 continues to take a toll on many countries. The like-for-like revenue less pass-through costs growth rate of 19.3% in the second quarter is our highest on record, as clients reinvest in marketing, particularly in digital media, e-commerce and marketing technology. We have returned to 2019 levels in 2021, a year ahead of our plan, with good momentum into 2022.“

  • Chris Daly, chief executive officer at the Chartered Institute of Marketing, said: “WPP’s results are reflective of the encouraging growth the wider advertising industry has experienced in the last few months. Mark Read will be relieved to see that efforts to capitalize on the brand’s purpose, by strengthening its digital capabilities and honing its data-led creative offering, have paid off.“

Digital media and digital transformation driving growth

  • In a statement, WPP said that markets had recovered “much faster than expected“ in the first half of the year and that digital media and digital commerce services had accounted for much of the growth.

  • GroupM estimates that digital media spend will increase 26% in 2021, a figure it revised up from a December prediction of 15%. Meanwhile, the experience, commerce and technology services represented 26% of revenue less pass-through costs (net sales) in H1. GroupM’s commerce billings showed a year-on-year increase of 61%. 

  • Read said: “Our focus on data, commerce and technology, through strategic acquisitions, organic investments and the launch of Choreograph, has supported a strong new business performance.“

  • Key account successes included AstraZeneca, Bumble, JP Morgan Chase, the US Navy, Hyatt, L’Oréal and Pernod Ricard, while PR services were also a strong performer for WPP – like-for-like net sales increased 7.4%.

UK and India leading recovery

  • Though Read said revenues had grown in every territory, the UK and India were particularly strong performers in the second quarter. Net sales shot up 31.8% in Britain and 30% in India. Germany also saw a similar increase of 20.3%. 

  • Daly said: “Today’s results also show the industry has much to be optimistic about, a sentiment that was uncovered in our latest report ‘The CMO 50’. According to the report 52% of the UK’s most senior marketers believe the marketing sector is stronger than five years ago.

  • ”The pandemic has reshaped society in ways we could have never imagined and consumers’ priorities have shifted for the long term. As we look toward 2022 and the recovery period, marketers will need to stay ahead of the curve by creating campaigns that tackle bigger issues and inspire consumers.”

  • In North America, like-for-like revenue increased 0.3% in the first half of the year, with the UK and western Europe seeing increases of 22.4% and 22.7% respectively.

Debts are down, but M&A activity is still ongoing

  • As of June 30, WPP’s net debt sits at £1.5bn – though it fell £1.2bn year-on-year, a decrease the company credits to ’good credit management’.

  • That hasn’t stopped it growing through acquisitions though, with the purchase of DTI in Brazil and NNFM, a mobile commerce provider. Meanwhile Kantar, which WPP still retains a 40% stake in, bought market intelligence company Numerator.

Talent investment

  • With many holding companies and agencies competing for creative talent, WPP is increasing its incentive pools – in plain English, the cash set aside for bonus payments – to make sure its staff don’t get their heads turned by the competition. In the first half of the year, it fenced off £244m for bonus payments, a major increase on 2020.

  • Read said: ”We have significantly increased our incentive pools in the first half, to reflect the tremendous contribution of our people in these challenging times, and in line with our intention to reinvest in talent announced at our Capital Markets Day in December 2020.”

  • WPP’s ’transformation’ efforts continue; it’s on track to open 32 campuses by the end of the year, including sites in Milan, Jakarta and Detroit. It says hybrid working will ’further amplify’ the benefits of this plan.