WPP withdraws 2020 guidance as key ad markets slow over coronavirus

WPP, the world’s largest advertising company, on Tuesday said it was withdrawing its 2020 guidance amid the coronovirus pandemic, joining rivals such as Publicis and Interpublic Group, who’ve done the same. The firm follows a January-December accounting year.
 

The move by WPP has implications for the Indian market, since the latter is the fifth largest for the global advertising giant. In 2019, WPP’s Indian unit had surpassed Brazil in terms of top line rate of growth, touching 10 per cent versus the latter’s 9 per cent. “As we enter the second quarter, it is clear that the impact of Covid-19 on the business will increase, but it is not possible at this stage to quantify the depth or duration of the impact,” Mark Read, chief executive officer of WPP, said.
 

Media industry experts said the domestic unit (of WPP) was unlikely to maintain its double-digit growth rate in 2020, given the stress that most advertisers were facing in the wake of the crisis. Media agencies are expecting advertising growth in India to be flat for the current calendar year versus 10 per cent growth forecast prior to the Covid-19 outbreak.
 

Most firms that Business Standard spoke to said they were not looking at advertising significantly in the April-June period, since the first priority for them was to resume manufacturing operations and ensure the safety of their workers.
 

Though the Centre, which announced a three-week lockdown on March 24, has now permitted movement of essential and non-essential items, firms in categories such as fast-moving consumer goods, electronics and discretionary products are expected to begin operations in a phased manner, since borders remained sealed and migrant labourers have headed back to their villages.
 

Experts also point to a liquidity crisis that companies are staring at given that the manufacturing cycle has been temporarily halted, pushing them to curb expenditure on advertising. This has a ripple effect on the ad market and agencies operating in the business, who are cutting back on spends across verticals. WPP announced a slew of cost-cutting steps on Tuesday, including plans to suspend a share buyback programme as well as distribution of final dividend to shareholders for 2019.
 

In addition, the company said it was freezing recruitment, postponing salary hikes for 2020 and stopping discretionary spends.

 

ASCI: Monitoring misleading ads

BS Reporter
 

The Advertising Standards Council of India (ASCI) on Tuesday said it was monitoring ‘unsubstantiated and opportunistic claims’ done by brands in the wake of the COVID-19 outbreak. The body has already asked firms to suspend such advertisements pending investigation, it said, without divulging the number.