WPP issued first half financial results today and analysts on a call to discuss earnings jumped on the fact that GroupM underperformed among the holding company’s global integrated agencies division.
The company didn’t provide specific breakouts for GroupM but reported that the agencies division combined organic net revenue was down 9.5% in the first half and down 15.7% in the second quarter.
VMLY&R was reported to be the best performing integrated agency, which company CEO Mark Read said was largely due to the company’s making the right call to merge VML and Y&R two years ago.
GroupM was described as an underperformer. But Read insisted during an analyst call that that shouldn’t have come as a big surprise given that the media arm’s revenue is more affected each quarter by client spending levels which have taken a nose dive since economies around the world starting shutting down in mid-March.
“It’s not a strategic issue,” Read stressed on the call, predicting that GroupM would rebound quickly as spending picks up in the future.
Read also noted that on one level GroupM has benefited from the significant reallocation of dollars to digital and particularly ecommerce in recent months. GroupM placed $7.4 billion in digital expenditures during the first half, or 39% of total billings, up more the five percentage points compared to the first half of 2019.
Separately, Read told analysts that the company’s three-year transformation plan, announced in late 2018 is on track. The company is planning an event toward the end of the year to provide more specifics.
On the call, executives also noted that the firm saved $200 million in the first half on work-related expenses like travel—expenses that the company believes will be permanent. More details will likely be provided at the year-end update event.