London: WPP, the world’s largest advertising group, cut its sales target for the second time in six months on Wednesday after consumer goods giants curbed spending, putting its shares on track for their worst day in 19 years.

Facing its weakest underlying revenue growth since the financial crash in 2009, WPP saw its shares fall as much as 13%, wiping some $2.6 billion off its market value.

Much of the problem stems from a move by packaged goods groups including Unilever, Nestle and Procter & Gamble to respond to weak growth by cutting back on advertising products such as washing powder, drinks and food.

Like its rivals, WPP has also been hit by an ultra competitive environment in the US where it lost two major contracts—VW and AT&T—meaning the group missed its first-half net sales target by some margin.

“It is difficult," chief executive Martin Sorrell told Reuters. “Most of our shrinkage came in the second quarter and we couldn’t adapt fast enough for that. But we feel good about the way we’ve controlled the costs."

Sorrell noted the growing influence of activist investors in the consumer goods sector, which he felt was adding to the pressure to rein in spending and boost margins. Consumer goods clients make up around a third of WPP’s revenue.

Analysts at RBC said eight of the 10 consumer goods companies which detailed their marketing approach in the first half of the year reported a decline as a proportion of sales.

Unilever, a WPP client which fought off a $143 billion takeover bid from Kraft Heinz in February, said it was looking to cut the number of adverts created by 30%. In the first half of the year, its spending with ad agencies fell by 17%.

Global giant

One of the best known businessmen in Britain, Sorrell built the advertising group from a two-man operation in a London office in 1985 to one that now dominates the industry with 205,000 people, including associates, working in 112 countries.

It provides advertising, data analytics and consultancy work to brands including L’Oreal, IBM, AstraZeneca and Vodafone.

While it outperformed its peers for several years after the financial downturn, it has been showing signs of strain in the last year as rivals fight for every dollar of ad spend.

On Wednesday it reported first-half like-for-like net sales down by 0.5%, below a consensus of 0.7% growth. It cut its full-year underlying net sales growth target to between flat and 1%, from a previous forecast of 2%.

Like peers Omnicom and IPG, net sales were particularly weak in the US. French group Publicis, recovering from several years of subdued trading, is one of the few ad groups to fare better in the US, posting decent results in July.

Worse than feared

While some analysts had forecast a weak set of results, the scale of the downturn took the market by surprise and the stock is now down 23% in the year to date.

“As we feared, WPP’s results did indeed surprise negatively and the scale of the slowdown was more than feared," Citi analysts said in a note to clients.

Brian Wieser, an analyst at Pivotal Research Group, said the shareprice reaction was overdone. “At a thematic level there is little that is different than anything management commented on at the time of the last quarter’s results," he said.

Tight cost controls helped the group to reiterate its target for a 0.3 point improvement in its operating margin, and net new business billings were up against last year.

WPP first rattled investors in March when it cut its 2017 sales forecast. From 3.1% net sales growth in 2016, it set a 2017 target of 2% to reflect “tepid" economic growth before it reduced it further on Wednesday.

Challenges on the horizon include the strength of Google and Facebook in digital advertising. While some marketers work directly with the two giants, cutting out the middleman, the appearance of expensive ads alongside hate speech or extreme content has helped reinforce the need for traditional ad groups.

Consultancies such as Accenture and Deloitte are also competing in the provision of data analytics.

WPP said on Wednesday that Google and Facebook were major media clients, and that while the consultancies had acquired some small digital agencies, there was little evidence so far of them making major inroads.

“The most significant pressures on client spending seems to be the impact of low growth and cheap money driving asset purchases, consolidation and zero-based budgeting," it said, in reference to the private-equity approach to cost control. Reuters

Martinne Geller also contributed to this story.