Advertising giant WPP said sales in the U.S. continued to slow last quarter, as the British group is restructuring its agencies to cut costs in the face of sluggish ad spending.

Revenue declined 4.5% in the U.S. in the fourth quarter, primarily due to lower spending by technology, healthcare and retail clients, WPP said in a statement on Thursday. The group saw strong growth in the UK and India, partially offset by declines in Germany and China. 

Revenue less pass-through costs was £11.9 billion ($15 billion) in 2023, in line with estimates. 

Also read: WPP to invest $318 million in AI annually

WPP CEO Mark Read said last year was “more challenging” than expected and is looking toward an improving economy and tentpole moments such as the Super Bowl, the Olympics and U.S elections to help drive growth in the U.S.

WPP creative agencies produced 12 Super Bowl spots and its media agencies worked on 19 spots.

“I can’t think of year when we’ve had more than five,” Read told Ad Age.

Revenue from integrated creative agencies was down 1.6% in 2023. Ogilvy, though, experienced growth, Read said, though he declined specifics. GroupM, which is separate from the creative agencies, grew by 4.9%.

Agencies such as VML and AKQA were more impacted than an agency such as Ogilvy because they work with more technology companies, Read said. 

Read is looking toward its recent restructuring efforts to help provide future growth in the long term despite restructuring costs in 2024 expected to total £285 million ($359 million).

The holding company’s six networks, including VML, Ogilvy, AKQA, Hogarth, GroupM and Burson, account for nearly 90% of the holding company’s revenue.

WPP expects luxury brands to spend more cautiously on ads this year, Read told Bloomberg. The forecast is “mixed” in the automotive sector and positive in the consumer goods sector as clients pursue a value strategy, Read added. 

This year, revenue, less pass-through costs, will be flat or grow as much as 1% from a year earlier, the London-based company said at its capital markets day last month. In comparison, rival Publicis Groupe SA is expecting its organic sales to grow 4% to 5% this year.

Facing sluggish sales growth due to the global slowdown and a decrease in spendings in the tech space, WPP has seen its share price falter over the last year. The London-based group has been restructuring its stable of advertising brands to save costs, and is betting on AI to boost its performance.

WPP shared plans last month to spend about £250 million ($318 million) a year to invest in new technologies to support its artificial intelligence strategy, after Publicis made a similar announcement.

Read said that its investments in AI are “critical” to the holding company’s future success.

“AI is going to impact every element of the way that we work,” Read told Ad Age. “It’ll force us to be much more integrated as an organization.”

WPP recently announced the launch of its AI platform, WPP Open, which is currently being used by 30,000 employees. 

—Bloomberg News with Ad Age’s Brian Bonilla