The news: WPP slashed its 2025 outlook in an earnings update, citing declines in client spend and net new business—exacerbating the agency’s turbulence over recent months and sending WPP stock to its lowest point since 2009.

By the numbers:

• WPP now expects an annual revenue decline of 3% to 5%, up from its previous forecast of 2%.
• The agency anticipates an H1 revenue drop of 4.2% to 4.5%, and could face a “below-expectations decline” of 5.5% to 6% in Q2.
• Anticipated headline operating profit for the first half of 2025 is now £400 million to £425 million ($511 million to $543 million), caused by severance action and declining revenues.
• WPP’s overall stock has decreased by about 40% within the past year.

Leading the decline: Turbulent times for WPP come as it continues its search for a successor to current CEO Mark Read, who’s set to depart at the end of 2025. Amid the shift, the agency is facing major client losses while AI simultaneously threatens the agency model.

• WPP is still reeling from its recent loss of Coca-Cola's US and Canada media business to rival Publicis, which the agency’s CFO Joanne Wilson admitted has affected its business in Q2.
• Its Coca-Cola loss was made worse when the agency lost its $1.7 billion Mars global media account, also to Publicis.
• WPP isn’t immune to the issues plaguing agencies worldwide. Agencies across the board are struggling with new business sales (69.6%), revenue growth (46.9%), shifting market trends (40.5%), and more amid an increasingly slow ad growth outlook.
• And while the agency is placing its hopes on AI tool WPP Open, the move may not be successful yet and was not mentioned in the company’s press release. As AI reshapes the ad industry, WPP’s decrease in client spending indicates that many are hesitant about whether the tool can deliver promised results.

Our take: WPP’s woes indicate that the traditional agency model is struggling to adapt to shifting client demands, AI-led marketing, and digital disruption.

• Agency clients are increasingly reallocating budgets toward partners that offer digital innovation and efficiency, and legacy models that aren’t able to adapt are being left behind. Global reach no longer guarantees a competitive advantage if modernization is absent.
• Simply adding AI capabilities like WPP Open isn’t enough when WPP still has to compete with major AI players like Meta and Google for client budgets. Deeper operational change is required for growth as agencies are pushed to become modern strategic partners rather than ordinary service providers. Digital fluency, adaptability, and forward-thinking approaches will win out over brand name recognition.