Advertising giant WPP has today reiterated its plans to invest £250m in proprietary technology to enhance its AI and data position as it looks to cut costs and improve productivity.
The group made the statement alongside its full-year 2023 results, which showed like-for-like revenue growth of 3.2 per cent. Revenue less pass-through costs grew 0.9 per cent on a like-for-like basis.
Reported operating profit for the year fell 60.9 per cent to £531m and reported profit before tax slumped 70.1 per cent.
WPP said the decline reflected the impact of accelerated amortisation of intangible assets as a result of the creation of VML, a new division formed through the merger of its VMLY&R and Wunderman Thompson divisions.
The world’s largest advertising agency reported $4.5bn (£3.6bn) of new business in the year, down from $5.9bn (£4.7bn) in 2022 as signs of strain in the advertising market started to show. However, the company went on to say its current pipeline of new “potential new business” remains higher year-on-year.
WPP noted its 2020 transformation plan remains on track, with gross savings of £475m achieved in 2023 against a 2019 base – ahead of the initial £450m target.
To help drive growth and improve efficiency, the company said it will be investing £250m in proprietary technology to “support our AI and data strategy” as announced at a strategy day in early January. WWP has also partnered with Adobe, Google, IBM, Microsoft, Nvidia and Openai to develop its tech offering for clients.
The company guided for like-for-like revenue growth (less pass-through costs) of zero to one per cent in 2024 and said it expected its operating profit margin to grow a further 20 to 40 basis points as cost savings come through.
The group proposed a final dividend of 24.4p, giving a full-year payout of 39.4p.
Mark Read, chief of WPP said: “AI will be fundamental for our business and we are embracing the opportunities that it presents, putting it at the heart of our operations and our work for clients. Our AI-powered platform, WPP Open, is now being used by more than 30,000 people across WPP with growing adoption by our clients.
“While 2023 was more challenging than we expected due to cuts in spending by technology clients, we delivered a resilient performance for the year with 0.9% like-for-like growth and a 0.2 point improvement in our headline operating margin at constant currency.”
He added: “We are optimistic about the strategic opportunities ahead of us and are confident that we can deliver accelerated and increasingly profitable growth over the medium term.”