WPP bets on AI to drive growth and savings

Shares in advertising giant WPP (LSE: WPP) jumped 2.8% Tuesday morning after the company unveiled plans to invest £250 million annually in artificial intelligence (AI) and data as well as cost-cutting efforts it says will help deliver growth and savings.

The FTSE 100 group said the technology investment over the next two years will be used to develop new AI-powered products and services and improve media performance. WPP believes AI will “enhance, not replace” human creativity at the firm.

Alongside the tech push, WPP announced restructuring moves it expects to yield £125 million in annualised net costs savings by 2025, with 40-50% of that figure targeted for 2024. It also aims to achieve £175 million in gross savings through back-office and delivery efficiencies.

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For 2023, WPP now expects like-for-like revenue growth minus pass-through costs of 3% and a 16-17% headline operating profit margin – an upgrade from its previous guidance.

The announcements came as the company continues integrating recent mergers such as that of creative agencies BCW and Hill+Knowlton under the new Burson brand launched this month.

WPP shares were up 1.6% to 793.80p by late morning Tuesday. The stock is down 16.4% over the past 12 months.