Down 24% year-to-date, WWP (LSE: WPP) is the worst performer on the elite FTSE 100 so far in 2025.

But it has an attractive 6.4% dividend yield and £1.2bn in cash flow. The resultant payout ratio of 78.3% more than covers payments.

It also looks undervalued with a price-to-earnings (P/E) ratio of 12.5. That suggests a decent amount of room for price appreciation – if earnings improve. With a net margin of only 3.68%, the business seems to be struggling with high expenses and low earnings. 

Sure, grabbing a few shares at this price could equate to a lucrative bit of passive income down the line. But if the company can’t find a way to boost profits, it may struggle to attract new investment.

Before I buy, I need to find out if the world’s largest advertising company has a future — or if cheaper digital options have taken over the market.

A global leader

WPP provides advertising, media buying, public relations, branding and data analytics to clients around the world. The company operates through well-known agencies like Ogilvy, GroupM, Wunderman Thompson and Grey.

It evolved from a shopping basket manufacturer when former Saatchi & Saatchi executive Martin Sorrell bought the company in 1985.

In the early 2000s, it began shifting into digital marketing to compete with major tech firms like Google. In 2013, it became the world’s largest advertising company.

Between 2009 and 2017, it dominated the market, with the share price soaring 366%. But after misconduct allegations forced Martin Sorrell’s resignation in 2018, things took a turn for the worse.

A stock in decline

The share price is now down 66.2% since a high of nearly £19 in late February 2017.

With strengths in TV, print, and outdoor advertising, it has struggled with the shift toward digital. Google, along with Meta, dominates this space, while WPP has struggled to maintain growth.

Most recently it’s faced several obstacles, including the loss of major client Coca-Cola to rival Publicis. The rise of artificial intelligence has been another challenge to its traditional media-buying model.

The economic slowdown in 2023 compounded these problems, with client budget cuts strangling revenue. Organic revenue decreased by 1% in 2024, prompting a weak outlook for 2025.

But it’s not all doom and gloom

WPP and Google Cloud recently established a partnership to integrate generative AI technology into marketing strategies. This collaboration aims to enhance marketing efficiency and effectiveness by combining Google’s expertise in data analytics and AI with WPP’s extensive marketing capabilities. 

The partnership will reportedly empower clients to create brand- and product-specific content, gain deeper insights into target audiences, predict content effectiveness and optimise campaigns. This is achieved by integrating Google’s Gemini AI technology into WPP’s Open Creative Studio. 

Is it worth it?

While the 6.4% yield is attractive, I wouldn’t say that alone is enough to justify an investment. The low P/E ratio has promise and if the Google partnership pays off, the price could recover well.

But until I see concrete evidence of that, I’m hesitant to buy. There are several other promising FTSE 100 dividend stocks like Aviva and HSBC with similar yields and more evident growth potential.