By Paul Sandle
LONDON (Reuters) -Advertising group WPP (LON:WPP) is to invest in AI to drive its top line and improve margins in the medium term but 2024 will be another tough year, as it forecast that like-for-like growth would be flat to up by 1%.
The British group set a medium-term target of growing its top line by more than 3%, driven by investment in AI, data and technology.
It also said it could improve its headline operating profit margin to 16-17%, up from an expected 14.8% in 2023. It sees a 20-40 basis points step towards that goal this year.
Chief Executive Mark Read said he would invest 250 million pounds ($317 million) every year in data and technology to support WPP's AI strategy.
"AI is transforming our industry and we see it as an opportunity not a threat," he said. "We firmly believe that AI will enhance, not replace, human creativity," he said on Tuesday.
WPP said like-for-like organic revenue grew 0.9% last year, in line with a forecast it cut in October after tech clients pulled back on marketing and there was a sharp slowdown at media buying agency GroupM.
Earlier in 2023 it had expected growth of up to 5%.
Analysts at Citi said 0.9% full-year growth indicated a better-than-expected fourth quarter, with a broadly flat performance against market expectations of -0.3% to -0.5%.
WPP's shares, which have this fallen 17% in the last 12 months, rose more than 6% in early deals to a six-month high.
Read has simplified WPP to focus on six networks – AKQA, Ogilvy, VML, Hogarth, GroupM and Burson – with an aim to deliver net cost savings of 125 million pounds a year from 2025.
Earlier this month, the company said it would merge communications agencies Hill & Knowlton and BCW to create Burson.
WPP will report full-year earnings on Feb. 22
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