Shares in London-based advertising giant WPP plunged 18% on Wednesday, stoking broader anxiety about the state of the ad business.
The stock settled at $29.34, its lowest point since the onset of Covid in 2020, after lackluster quarterly earnings results and the company’s unexpected lowering of profit forecasts. WPP cited a combination of client defections and economic jitters. The sector is facing significant disruption due to AI, which can perform functions like planning, buying and creative execution at a fraction of traditional costs.
Trading volume was nearly eight times its average level, and the plunge followed an equally poor day on the London Stock Exchange, where shares at one point touched a 16-year low. On Wall Street, shares of the two other major agencies traded in New York (Omnicom and Interpublic) each shed 3%. Last December, Omnicom announced its plan to acquire Interpublic, which would create the world’s No. 1 agency and leave it, Publicis and WPP as the three surviving majors.
The poor financial and stock news came several weeks after a key WPP subsidiary, WPP Media, was abruptly fired by Paramount after two decades of working on its movie studio campaigns and other projects. Coca-Cola has also moved its North American media buying business to Publicis, which also took Mars from WPP.
CEO Mark Read, who has said he will step down before the end of the year, told analysts on a conference call that the lowered profit forecast reflected the impact of several client losses along with economic uncertainty. WPP Media, until recently known as GroupM, has faced “some distractions to the business,” Read said. “The implementation of the new strategy for WPP Media is going well, but we’re clearly not yet seeing that translate into better business performance.”
Evan Spiegel, CEO of Snap Inc., was asked in a CNBC interview from the Allen & Co. conference in Sun Valley, ID about the tumble for WPP shares and what it means for all advertising stakeholders. “It’s hard to speak specifically about WPP’s business,” he said, “but there’s no question it’s an uncertain business environment.”
When Snap reported quarterly results last spring amid the confusion about President Trump’s tariff rollout, it cited “macro headwinds” hitting its ad business. Investors pummeled the company’s shares, which have fallen 46% over the past year.
Some large-scale digital ad sellers, for example Meta and YouTube, have managed to remain on a steady growth trajectory. The state of their businesses, and those of other ad industry stakeholders, will become clear over the coming weeks as more media and tech companies report quarterly earnings.
