Core Insights - The 32nd China International Advertising Festival and the 34th Asian Advertising Congress were held together for the first time, creating a significant platform for the advertising industry to connect with Asia and the world [1] - Chris Reitermann, CEO of WPP China, discussed the impact of AI on the advertising industry, emphasizing that while AI presents challenges, it also offers substantial opportunities for efficiency and collaboration with clients [1][3] - WPP is investing £300 million annually in developing its AI marketing platform, WPP Open, and has partnered with Google to create AI-based client solutions [3][8] Group 1: AI Impact on Advertising - The advertising industry has historically adapted to technological disruptions and is now facing the AI wave as an opportunity for efficiency and new revenue streams [1][3] - WPP's approach to AI includes a focus on balancing short-term and long-term interests, as well as recognizing the current investment bubble in the AI sector [2] - Companies with AI capabilities tend to have higher brand value and disruptive potential, highlighting the importance of strategic AI investments [2] Group 2: WPP's AI Strategy - WPP Open marketing platform enables data acquisition, creative generation, and audience targeting, showcasing the integration of AI throughout the advertising process [3][8] - The platform's SaaS version, WPP Open Pro, adopts a subscription model, breaking traditional agency fee structures [3] - WPP aims to reshape business models and create new revenue sources through AI, while also emphasizing the need for talent with technical skills [3][9] Group 3: Industry Adaptation and Talent - The concept of "fluidity" was highlighted as a key characteristic of the current market, necessitating a shift in operational structures to remain competitive [4][5] - Brands must develop agile operational models to respond to rapid market changes, moving from linear structures to more flexible approaches [5] - AI is seen as a tool to enhance human creativity rather than replace it, with companies like Coca-Cola integrating AI across their operations to optimize marketing strategies [7][9]

Core Insights - WPP's new CEO Cindy Rose acknowledged the company's recent performance as unacceptable during her first earnings call since taking over on September 1, replacing Mark Read [2][3] Financial Performance - WPP reported a 5.9% decline in revenue less pass-through costs on a like-for-like basis, totaling 2.46 billion pounds (approximately $3.2 billion) in Q3, which was worse than expected [3] - The company revised its full-year guidance, now anticipating a decline in like-for-like revenue less pass-through costs between 5.5% and 6% for 2025, compared to previous estimates of a 3% to 5% decline [3] - Q4 is projected to see like-for-like declines between 7.5% and 9.5%, which is concerning for a typically busy period [3] Agency Performance - WPP's global integrated agencies experienced a 6.2% decline in like-for-like revenue in Q3, with the media-investment arm, WPP Media, down 5.7% [4] - WPP Media has faced significant account losses, including the Mars business and Coca-Cola's media and data duties in North America, which were lost to Publicis Groupe [4] Client Dynamics - CFO Joanne Wilson noted volatility in client budgets and macroeconomic uncertainties affecting various sectors, leading to sustained growth headwinds from client losses into 2026 [5] - WPP is focusing on expanding its work with existing clients and has seen an increase in activity in the new business pipeline [5] Strategic Initiatives - WPP launched WPP Open Pro, a self-service product that allows brands to access WPP's AI solutions without hiring a specific agency, targeting small- and mid-sized marketers [6]

Financial Performance - WPP reported a Q3 revenue decline of 8.4%, with a year-over-year decrease of 3.5% [2] - The company now expects a revenue decline of 5.5% to 6.0% for 2025, revised down from a previous forecast of 3% to 5% [2] - WPP issued its second profit warning for the year, indicating ongoing financial challenges [2] Leadership and Strategy - New CEO Cindy Rose emphasized that the current financial performance is "clearly far from acceptable" and committed to implementing corrective measures [2] - In her first two months, Rose focused on enhancing WPP's AI capabilities, including a $400 million agreement with Google and the launch of the WPP Open Pro AI platform [3] - WPP Media was rebranded from GroupM, with Rose expressing confidence in the leadership of Brian Lesser to create a data and AI-driven ecosystem [3] Client Acquisition and Market Challenges - Despite challenges, WPP Media secured new business from clients such as Mastercard, Maersk, and Marks & Spencer [4] - The departure of WPP Media's North America CEO Sharb Farjami raised questions about the company's future direction [4]

Financial Data and Key Metrics Changes - Like-for-like revenue less pass-through costs fell 5.9% in Q3 2025, leading to a year-to-date decline of 4.8% [4][5] - Overall revenue less pass-through costs was down 11.1% in the quarter [5] - Adjusted net debt stood at £3.6 billion, stable year-on-year but up from year-end [16][17] - The company expects a like-for-like decline of -5.5% to -6% for the full year, revised from previous guidance [18][19] Business Line Data and Key Metrics Changes - Global integrated agencies experienced a like-for-like decline of 6.2% in Q3 [6] - WPP media saw a like-for-like decline of 5.7%, with a nine-month performance decline of 3.9% [7] - Public relations declined by 5.9% in Q3, following a 7.8% decline in Q2 [11] - Specialist agencies saw a decline of 2.2% in Q3, with strong growth from CMI Media Group offsetting weaker performance in other areas [12] Market Data and Key Metrics Changes - North America declined by 6% in Q3, with significant impacts from WPP Media and Ogilvy [12] - The UK saw an 8.9% decline in Q3, reflecting media client assignment losses [12] - Western continental Europe experienced a like-for-like decline of 4.4% [13] - Healthcare sector showed strong performance with high single-digit growth [15] Company Strategy and Development Direction - The company aims to strengthen financial performance and improve shareholder returns while delivering success for clients [2][3] - A focus on simplifying and integrating client offerings, powered by data and AI, is emphasized as a core principle for future growth [31] - The company is committed to leveraging technology partnerships, such as the expanded agreement with Google, to enhance AI capabilities [27][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledges recent performance has been unacceptable and emphasizes the need for action [2][25] - There is a significant degree of polarization in client spending, with some sectors experiencing robust growth while others face declines [8][10] - The management expresses optimism about the growth opportunities ahead, particularly in the context of AI and technology [20][24] Other Important Information - The company has a strong liquidity position with £2.9 billion available at the end of September [18] - The weighted average maturity of bond debt is 6.1 years, with an average coupon of 3.5% [18] Q&A Session All Questions and Answers Question: Can you provide more details on the lower spend from existing clients? - The cuts are primarily in project work, with significant declines in CPG, automotive, and tech sectors [34][37] Question: What is the competitive landscape for the SMB market regarding WPP Open Pro? - The strategy is about expanding the addressable market, and revenues from WPP Open Pro are expected to be incremental [35][40] Question: Why is there no downgrade to the cash flow guidance despite lower margin and top-line guidance? - The unchanged operating cash flow guidance is due to disciplined cash management and some FX tailwinds [64][66] Question: What feedback did you receive from clients who stopped using WPP? - Feedback indicated a lack of clarity about the end-to-end story and complexity in the organizational structure [65] Question: What is the company's stance on its balance sheet strength? - The company maintains a strong investment-grade balance sheet with no covenants on debt [73]

Financial Data and Key Metrics Changes - Like-for-like revenue less pass-through costs fell 5.9% in Q3 2025, leading to a year-to-date decline of 4.8% [4][18] - Overall revenue less pass-through costs was down 11.1% in the quarter, with a 1.7% drag from foreign exchange [5][18] - Adjusted net debt stood at GBP 3.6 billion, stable year-on-year but up from year-end [16][17] - The company expects a decline in headline operating margin performance, guided to be around 13% [19] Business Line Data and Key Metrics Changes - Global integrated agencies experienced a like-for-like decline of 6.2% in Q3, with WPP media declining 5.7% [6][10] - Public relations saw a like-for-like decline of 5.9%, while specialist agencies declined 2.2% [11][12] - Healthcare sector showed strong growth with a like-for-like increase of 6.7% [15] Market Data and Key Metrics Changes - North America declined by 6% in Q3, with significant impacts from WPP Media and Ogilvy [12] - The U.K. saw an 8.9% decline, while Western continental Europe experienced a 4.4% decline [12][13] - China’s decline moderated to 10.6%, while India returned to growth at 6.7% [13][14] Company Strategy and Development Direction - The company aims to strengthen financial performance and improve shareholder returns while enhancing client success [2][3] - A focus on simplifying and integrating client offerings, powered by data and AI, is emphasized as a core principle for future growth [31] - The company is committed to leveraging technology partnerships, such as the expanded agreement with Google, to enhance AI capabilities [27][28] Management's Comments on Operating Environment and Future Outlook - Management acknowledges recent performance as unacceptable and emphasizes the need for urgent action to improve execution and client service [25][32] - There is a recognition of the volatility in client spending patterns and the impact of client losses on future performance [19][46] - The management expresses optimism about the growth opportunities in the marketing industry, particularly with advancements in AI [20][24] Other Important Information - The company is revising its full-year organic growth guidance to -5.5% to -6% due to continued volatility in client spending [18][19] - Average adjusted net debt has slightly decreased to GBP 3.4 billion, benefiting from the impact of disposals [17] Q&A Session Questions and Answers Question: What is the reason for lower spend from existing clients? - The cuts in spending are primarily in project work, particularly in sectors like CPG, automotive, and tech, with a high degree of polarization within sectors [34][37] Question: Can you provide insights on the competitive landscape for WPP Open Pro? - The strategy is focused on expanding the addressable market, with expectations that revenues from WPP Open Pro will be incremental [35][40] Question: What factors contributed to the revised full-year guidance? - The guidance reflects a combination of client losses, volatility in spending, and a cautious outlook for Q4 based on trends observed in Q3 [42][55] Question: How is the company addressing staff motivation amid current performance challenges? - The company is focused on retaining top talent and providing a world-class employee experience, emphasizing the importance of employee development [52][58] Question: What feedback has been received from clients regarding their experiences with WPP? - Clients have provided positive feedback on the quality of work but have expressed a desire for a simpler and more integrated offering [59][60]

Financial Data and Key Metrics Changes - Like-for-like revenue less pass-through costs fell 5.9% in Q3 2025, leading to a year-to-date decline of 4.8% [3][4] - Overall revenue less pass-through costs was down 11.1% in the quarter [4] - Adjusted net debt at £3.6 billion, stable year-on-year but up from year-end [14][16] - Revised full-year organic growth guidance to -5.5% to -6% [17][18] Business Line Data and Key Metrics Changes - Global integrated agencies experienced a like-for-like decline of 6.2% in Q3 [5] - WPP media saw a like-for-like decline of 5.7%, with a nine-month performance decline of 3.9% [5][6] - Public relations declined by 5.9% in Q3, following a decline of 7.8% in Q2 [10] - Specialist agencies saw a decline of 2.2% in Q3, with strong growth from CMI Media Group [10] Market Data and Key Metrics Changes - North America declined by 6% in Q3, with key drivers being WPP Media and Ogilvy [11] - The UK declined 8.9% in Q3, impacted by media client assignment losses [12] - Western continental Europe saw a like-for-like decline of 4.4% [12] - Healthcare sector delivered high single-digit growth, contrasting with declines in CPG and automotive sectors [13] Company Strategy and Development Direction - The company aims to strengthen financial performance and improve shareholder returns while delivering success for clients [2] - Focus on simplifying and integrating client offerings, powered by data and AI [29] - Plans to leverage data and AI advantages to expand addressable market, particularly in enterprise and technology solutions [26][29] - Emphasis on improving execution and building a high-performance culture [25][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges recent performance has been unacceptable and is focused on identifying and addressing issues [19][24] - Clients desire simpler, more integrated offerings that are efficiently priced [25] - The company is optimistic about growth opportunities in the AI era, positioning itself to lead in this transformation [20][23] Other Important Information - The company has a strong liquidity position with £2.9 billion available at the end of September [17] - The weighted average maturity of bond debt is 6.1 years with an average coupon of 3.5% [16] - The company is committed to maintaining an investment-grade balance sheet [16][71] Q&A Session Summary Question: Insights on lower client spending - Management noted that project work and delays are the main areas of reduced spending, particularly in CPG, automotive, and tech sectors [32][35] Question: Full-year guidance and underlying slowdown - Guidance reflects a cautious outlook due to client losses and volatility in spending patterns, particularly in the media business [41][43] Question: Staff motivation strategies - Management emphasized the importance of retaining top talent and providing a world-class employee experience [50][57] Question: Feedback from lost clients - Initial discussions with lost clients revealed consistent feedback on the complexity of the company's offerings and organizational structure [62][63] Question: Cash flow guidance and working capital - Operating cash flow guidance remains unchanged due to disciplined cash management and FX tailwinds [62][65] Question: Balance sheet strength and investment capabilities - The company maintains a strong balance sheet and is focused on reallocating investments to areas that will deliver the fastest returns [71][72]