WPP Reveals 'Strong Performance' in Half-Year Results for 2021 as Staff Bonuses Soar

WPP, the world’s largest agency network, has revealed a resurgence in its business performance during the first half of the year to June 30, admitting surprise to have beaten its expectation of two years to recover. However, it has also revealed a spike in staff bonuses being paid, expected to reach $626.6 million (450 million pounds) for the year. For the first half in 2021, the network revealed year-on-year reported revenue growth of 9.8% to $854 million (6,133 million pounds) and a reported operating profit increase of 54.4% to $821 million (590 million pounds). Also revenue less pass-through costs (organic growth) was up by 11%, indicating “good momentum across the business,” stated Mark Read during the company’s investor’s call. This was due to a "respectable" performance around new business, with net new billings reported at $2.9 billion (2.08 billion pounds) including contracts from brands such as AstraZeneca (VMLY&R), Bumble (Wavemaker), JP Morgan Chase (Mediacom), Pernod Ricard (Ogilvy) and the retention of the contract with the U.S. Navy, also through VMLY&R. “What we are seeing is a reinvestment in marketing as the economy recovers,” explained Read of the resurgence, which is being experienced across the industry, including at rival advertising agency networks. The ecommerce opportunity Digital commerce spend recorded during the period saw a 61% increase with WPP looking to focus on the growth potential within that sector, Read admitted. He expanded: “Ecommerce related to every aspect of our business, from advising clients on their ecommerce strategy and thinking when they go direct to consumer, when do they sell best through traditional retailers, when do they take advantage of Instacart … and how we help them spend their money through their media business, how they get data from the ecommerce companies to help them target their marketing spend and drive innovation. Ecommerce is a fundamental change in how clients sell.” CEO Mark Read Discusses WPP's Data-Focused Shift Toward a New Digital Age Staff incentives increase However, the post-lockdown rush by employees across agencies to find new roles has led to a growth in staff incentives being paid, with $340 million (244 million pounds) the figure laid out during the first six months and a prediction that it will overtake $627 million (450 million pounds) over the full year. That is an increase of 411% by $273 million (196 million pounds) compared to 2020 H1 spend of $67 million (48 million pounds.) Talking about the strong performance and the potential of continuing that performance, John Rogers, chief financial officer for WPP explained: “We believe it is important to reward our colleagues with a strong bonus. Having had a tough year last year, it would be great to be able to reward our colleagues with a strong bonus this year reflecting a strong performance.” He admitted that the figure was “a little higher than the normalized position,” which he outlined as being between $420 million and $490 million (300 million pounds to 350 million pounds) a year. He later added on the call that the business was seeing “a big step up” in churn levels on last year but added that compared to 2019 it was “not too dissimilar.” Geographically, the second quarter recorded growth across all markets, significantly in the U.S. at 12.6%, the U.K. at 31.8%, Germany at 20.3% and Italy at 52.7% as recovery continues following the pandemic’s impact in 2020. Across the agencies, media saw a two-year growth in spend of 3.7% and the digital mix increased by 43% with Fincast recording 113% growth and Xaxis up by 56%. PR and public affairs were also up by a combined 2.6% over two years.