Tech giants slash ad spend, forcing WPP downgrade as growth fears intensify

A major pullback in ad spending by tech giants like Amazon, Apple and Google led ad firm WPP to slash its growth forecasts, raising concerns about the global economy.

WPP, the world’s largest ad company, reported a 51% plunge in first-half profits to £204 million. It downgraded full-year growth estimates to 1.5-3% from 3-5% previously, sending its shares tumbling 7% in London.

CEO Mark Read said performance remains “resilient” except in the US, which was impacted last quarter by reduced tech client spending and project delays. He didn’t directly blame Elon Musk’s Twitter, now called X, but analysts suspect it contributed.

Rival S4 Capital and Interpublic voiced similar tech budget cut woes.

While WPP won new UK business from easyJet, Pernod Ricard and Lloyds, the US outlook is clouded by election uncertainty, said Read. Fitch just downgraded US debt.

JP Morgan cut its WPP target to 1200p from 1260p. Read insists a recession isn’t coming despite caution, citing WPP’s AI initiatives with Nestle, Nike and Modelez as future growth drivers.

Ad agencies face pressure to reveal when ads use AI-generated images so consumers aren’t misled. “The public deserves transparency,” said an industry group director.

WPP’s half-year dividend held at 15p.