When economic downturns strike, one area companies always slash spending on is advertising – so coronavirus is far from good news for ad agency WPP
When economic downturns strike, one area that companies almost always slash spending on is advertising.
So the coronavirus crisis is far from good news for ad agency WPP, which is due to report its half-year results on Thursday. Rivals have already reported plunging revenues during the pandemic, with airlines, car makers and luxury goods firms among customers cutting back on marketing.
It comes at a difficult time for WPP, which is embarking on a major overhaul under boss Mark Read after the departure of predecessor Sir Martin Sorrell in 2018.
Since coronavirus first struck, Read has responded by attempting to cut up to £800m in costs and telling the agency’s 100,000-strong workforce to do their jobs from home.
He has put in place a hiring freeze and taken a pay cut along with some other top bosses. Thursday’s update should show if these measures have been successful.
And analysts will also be looking for any guidance from management on how they expect the rest of 2020 to go.
WPP may be able to shed light on conversations with clients, and if it has picked up extra business from firms that are doing well out of the crisis.