WPP reports ‘outstanding’ 2021, boosted by Coke and GroupM

WPP has reported what it calls “outstanding” full-year results for 2021, boosted by new business gains such as Coca-Cola, the strong performance of GroupM and increased demand for digital and e-commerce and technology services from its clients.

The holding company's revenue rose by 6.7% to 12,801 million pounds last year, or 12.1% on an organic like-for-like basis. As the last of the major holding companies to report full-year results, that compares well to its major competitors. Publicis reported organic revenue growth of 10%, Interpublic 11.9% and Omnicom 10.2%.  The 12.1% growth figure is also up 2.9% on pre-pandemic 2019. 

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New business was a significant contributor. WPP said it added $8.7 billion in net new business in 2021 including the global Coca-Cola account and the expansion of its work with clients such as Google and Unilever. Speaking on an earnings call, Read called the Coke win a “validation of the state of the company.”

He added: “It’s the type of relationship of the future and the type of relationship we want to have with our clients. What they are saying is that creative ideas remain critical, but they also need depth and breadth and scale and the ability to deliver that around the world.”

GroupM boost

WPP also cited the contribution of media arm GroupM, whose organic revenue rose by 16.1% on the back of "very strong" performances in the second, third and fourth quarters of 2021. Read said its two-year growth rate was up 7.4%, hardly showing the impact of COVID, which is "comparable to the growth rate of a number of global data or business services franchises." An important trend has been the global consolidation of media, he said, as clients seek to simplify their partnership strategies to "move more quickly in a much more agile way."

The holding company said it was improving its business mix in its global integrated agencies with growth areas in commerce, experience and technology. For example, both Ogilvy and AKQA had improved their performances, stated Chief Financial Officer John Rogers. 

Breaking things down geographically, the fourth quarter was particularly strong in the U.S., where revenue rose by 11.7%, and the U.K., where it increased by 9.9% on an organic basis. Germany also grew by 3.4% and Greater China by 13.6%, although Australia was still in decline at minus 2.2%. 

WPP’s full-year operating margin was up 14.4% and its pretax profit was 951 million pounds, compared to a loss of over 2 billion in 2020. The company is proposing a final dividend of 18.7 pence to shareholders, up 33.6% on last year, and it stated that one billion pounds had been returned to shareholders in 2021 through share buybacks and dividends.

2022 outlook

For 2022, the company is predicting revenue growth less pass-through costs growth of around 5%. That is similar to forecasts by its competitors, which also cited 4-5% growth rates. Rogers also said WPP expected to increase its headcount in 2022. 

Read also acknowledged the potential impacts of both inflation and the current situation in Ukraine which could have “global implications.” He started the call by mentioning the company's 200 staff in Kiev and saying “we will provide whatever support we can.” But he added that the company’s Russian revenue represented a “relatively small percentage" of WPP's whole.

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Speaking on the earnings call, Read discussed the role the metaverse would play in 2022. “Clearly, Facebook’s rebranding captured the world’s imagination.”

“It’s easy to be cynical about it just as people were cynical about watching video on mobiles 10 years ago,” he told an analyst who questioned its importance. 

He cited two recent projects from WPP companies: Working with EMI to take the British rock band Bastille’s new album and put it into a virtual world, and a collaboration with Under Armour on NFT sneakers that could be worn across different video games. Of the latter, Read pointed out: “There was no paid media involved in it. And they had four and a half million consumers engaging in it.”

Read also pointed to the importance of brand purpose "at the heart of our offer."

"Purpose is critical and deeply embedded into our organization," he stated. As well as being demanded by clients, he said WPP had now entered the FTSE's top 10 in terms of gender representation, with 39% female senior leadership. It has launched WPP Unite, the company's first LGBTQ+ committee, and it is working with Black talent networks to increase diversity in every department.