WPP CEO Mark Read has warned that growing trade tensions and tariffs will “undoubtedly” have an impact on many customers’ advertising and promotional expenditure plans, even if WPP is only indirectly affected.

During the company’s first quarter earnings call, Read highlighted the rising problems the brand is confronting in a turbulent macroeconomic environment, following the first quarter report, wherein, WPP reported revenue less pass-through costs, a crucial indicator of agency health down 2.7% on a like-for-like basis to £2.48 billion (approximately $3.2 billion).

Total sales decreased 5% year on year on a reported basis, or 0.7 like-for-like, to £3.2 billion. WPP’s media-buying division, GroupM, had a 0.9% fall, while other global integrated agencies fell 4.4%.

Regional slowdowns were strongest in China, where revenues fell 17.4% from the previous year, contributing significantly to overall contraction. Despite the poor results, WPP confirmed its full-year outlook of flat to slightly negative growth, with improvements expected in the second half of the year.

Read added that, contrary to some analyst projections, there was no significant pull-forward of investment is Q1, but prolonged tariff uncertainty could impair future spending patterns. “This is a more challenging macro environment with tariff uncertainty,” says Read. “And while WPP is not directly impacted by tariffs, they will undoubtedly impact many of our clients and where and how they priorities their margin investments in advertising and promotion.”

Marketers, he continued, have gotten better at managing times of global instability, noting earlier crises like the COVID-10 epidemic, the Ukraine crisis, and inflation spikes. Tariffs, on the other hand, may have an “asymmetric” impact; while some clients may face significant disruptions in manufacturing costs, others may suffer only minor consequences. Nonetheless, consumer confidence remains a major challenge in all sectors.

The ad holding company has already accounted for volatility in its full-year prediction, with growth ranging from flat to down 2%. Read also addressed conjecture in specific industries, such as cars, disputing the idea that brands increased ad expenditure in the first quarter in anticipation of future price increases.

Despite battling challenges, WPP made significant gains, expanding its partnership with Heineken to cover global shopper marketing and commerce responsibilities. GroupM recently bought InfoSum, which is meant to boost the company’s data-driven marketing and AI capabilities. WPP continues to prioritize the deployment of its Open operating system, which is now utilized by 60% of its client-facing employees.

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Nonetheless, obstacles exist. GroupM, a focus of WPP’s restructuring efforts, is still dealing with legacy client losses such as Pfizer and a persistent downturn in crucial countries, particularly China. Meanwhile, the agency has recently received internal criticism for its return-to-office policy, with some reports suggesting cramped workspaces and staff unhappiness.

Looking ahead, management emphasized that, while present client spending habits are solid, the situation may swiftly change if tariff rules are tightened further. Rivals like IPG have also said that advertisers are conducting intensive scenario planning to prepare for various economic outcomes.