WPP record 22 per cent decline in new business this quarter

WPP said 2015 would continue to be "demanding" after sales growth at the world's largest advertising company slowed last quarter.

The London-based firm, which works for brands including Vodafone, Mondelez and Ford, said net sales growth that strips out currency swings and takeovers slowed to 2.5 per cent during the period, from 3.8 per cent a year earlier.

Net new business in the quarter was $1 billion, a decline of 22 per cent on the same period last year.

Many customers are focused on cost control and unwilling to spend on big marketing campaigns, WPP's chief executive Martin Sorrell said.

Clients and consumers are increasingly cautious and averse to taking risks, said WPP, the owner of ad agencies including Young and Rubicam and Grey Group.

Reported revenue for the first quarter rose 8.3 per cent to £2.78 billion ($4.2 billion), WPP said in a statement today.

Shares were down 1.6 per cent at 1,570 pence this morning. The stock had gained 19 per cent this year by midweek.

Sorrell said China and India both performed well in the first quarter and business in Russia had increased by more than 4 per cent.

Consumers in many markets were spending more on technology like smartphones instead of everyday products such as food and clothing, he said.

The industries that spent the most in the first quarter were the automotive, retail, travel and airline businesses.

Data investment is one of the key priorities at WPP, as marketers and brand want more information on consumers’ shopping and spending behavior.

WPP last week started a new 200-person data consultancy called The Gain Theory which helps clients use data to craft more effective and targeted advertising campaigns.

The company is forecasting net sales and revenue growth of more than 3 percent this year, and targeting net sales margin improvement of 0.3 percentage points, excluding the impact of currency for 2015.

WPP is also considering whether to raise its dividend payout ratio after meeting a 45 per cent one year ahead of schedule, compared with a pay-out ratio of 42 per cent in 2013.

The US is WPP’s largest market, followed by the U.K. and China. Almost 37 per cent of WPP’s revenue came from digital operations in the first quarter.

The company is targeting 40-45 per cent of sales from digital business in the next five years.

- Bloomberg