Rapid digital switch puts WPP on path to recovery

[LONDON] The world's biggest advertising company WPP expects its net sales to return to pre-pandemic levels by 2022, a year earlier than expected, driven by the rapid global corporate switch to e-commerce and digital services.

The owner of the Ogilvy, Grey and GroupM agencies was hit hard earlier this year when clients slashed spending to conserve cash but it has since been winning new work by helping clients build their e-commerce operations.

Chief executive Mark Read said the business had proved more resilient than many had expected and a strategy set out two years ago to offer clients a combination of digital expertise with data and creativity had proved invaluable during 2020.

"Covid has accelerated many of the trends," he told Reuters. "The shift to digital media, the explosion of e-commerce, the importance of purpose and reputation: the fundamentals of our strategy haven't changed but Covid forced us to accelerate it."

WPP's agencies worked with brands such as L'Oreal, Ford and British retailer The Works to switch their marketing and sales platforms online rapidly as the virus forced the closure of shops.

After a turbulent 2020, the company built by Martin Sorrell set out its targets for the medium term, vowing to reinstate its share buyback programme in 2021, pay a progressive dividend and invest further in technology to win new work.

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Its shares, down 23 per cent on the year, were up 3.5 per cent in early trading.

For 2020, it expects its key measurement of underlying net sales to drop by 8.4 per cent. To get back to 2019 total levels by 2022 would require an underlying growth rate of about 4.7 per cent in 2021 and 4.5 per cent a year later, slightly ahead of market expectations.

Mr Read said sectors that had been floored by the pandemic, such as airlines and cruise liners, were starting to prepare for a recovery next year though momentum could change day to day.

Hopes in recent weeks of a return to some normality have been driven by the launch of a vaccine but surging Covid-19 cases across Europe in the last week alone have since cast a shadow over the short-term outlook.

REUTERS