Ad budgets by big spenders in the auto and retail spaces have been walloped during the coronavirus as demand has fallen off a cliff. When they come back is anyone’s guess.
But that doesn’t mean household name brands aren’t in the trenches thinking about how to communicate to consumers later this year when the coronavirus hopefully is beyond its peak. Laying a groundwork for that road to recovery today is important, says Mark Read, CEO of WPP, the world’s largest advertising company. And so is continuing to communicate with households at the peak of the coronavirus.
“Our people are busier than they have ever been,” Read said in an exclusive interview on Yahoo Finance’s The First Trade. I would say a large number of our clients are doing a lot in the crisis. They should be talking about what they are doing for their customers.”
All of that isn’t to say WPP hasn’t been hit by the swift downturn in advertising spending.
WPP said on March 31 its performance in markets experiencing coronavirus outbreaks will be weaker in March than January and February. For the first two months of the year, WPP got off to a good start with revenue, less pass through cost,s up 0.4%. The company notched several key wins in its important North America business late last year, including Intel, Hasbro and Discover.
Read has moved quickly to shore up WPP’s liquidity position by halting buybacks and cutting the dividend. That alone is expected to save 1.1 billion pounds. The company has close to 5 billion pounds in total liquidity (cash plus access to cash via its credit revolver).
The company has also tightened up its cost controls in an effort to save another 700 million to 800 million pounds annually.
Read hasn’t ruled out taking further cost-reduction actions such as reducing headcount.
“No company is immune to the financial consequences of what is going on and we have really been looking at our internal costs, freezing salaries and freezing new hires. I think like other companies we can’t rule out further measures and we are working our way through that process as we speak,” Read said.