WPP Credits E-Commerce, Digital Growth for ‘Outstanding Year’

Advertising giant WPP PLC said Thursday that its 2021 like-for-like net revenue was up 12% from 2020 and 2.9% from the pre-pandemic year of 2019, driven by strong demand for digital services, e-commerce and technology.

Like-for-like net revenue strips out the effects of acquisitions, disposals and pass-through costs, such as expenses billed to clients.

The London-based company, which owns Ogilvy, Wunderman Thompson and VMLY&R, as well as media-buying business GroupM, said 2021 was a strong year for the global ad industry—driven by a stronger-than-expected macroeconomic environment, increased spending by consumers using pent-up savings and growth in digital channels.

“It has been an outstanding year for WPP. Our top-line growth, driven by strong demand for our services in digital marketing, media, e-commerce and technology, has resulted in our fastest organic growth for over 20 years,” WPP Chief Executive Mark Read said in a statement. “As a result, we are two years ahead of our plan, hitting our 2023 revenue target in 2021.”

WPP recorded 2021 revenue of £12.8 billion ($17.1 billion), up 6.7% from £12 billion in 2020. Net profit rose 29% to £954 million from £742 million, helped by cost controls and improved margins.

In the fourth quarter, like-for-like net revenue grew 11% from the year-earlier period and 3.6% from the pre-pandemic fourth quarter of 2019.

WPP forecasts net like-for-like revenue of around 5% in 2022.

The company said one major driver of digital growth has been an explosion in e-commerce. GroupM estimates global retail e-commerce grew by 20% in 2021.

Digital-first businesses are spending more on marketing to grow quickly because they don’t have the costs associated with physical stores, WPP said. Traditional advertisers are investing in retail and commerce media, blurring the lines between their marketing and sales promotion budgets, and boosting markets for marketing services businesses, the company added.

“Clients either want to be where…consumers spend time or where consumers spend money,” Mr. Read said in an interview. “And that’s what our job is—to help them do that.”

Mr. Read said on the company’s earnings call that he was looking at the situation in Ukraine “with great concern,” adding that Russia’s attack on the neighboring country could have a broader macroeconomic impact.

“Notwithstanding today’s events, we are still expecting the strong consumer-led recovery as the world opens up [from] the pandemic,” Mr. Read said. “Inflation has tended to be helpful for advertising spend more generally. I think clients are looking where they can, despite inflation pressures, to maintain their spending, to keep market share.”

Mr. Read said on the earnings call that WPP has about 200 staffers based in Ukraine and the company is providing them with financial and other assistance.