WPP PLC's report of a stunning slowdown in ad spending by consumer product companies hit other advertisers and sent a chill across the stocks of traditional media companies.
The world's largest advertising company lowered its full year forecast for net sales growth to 1 percent or even less, blaming the pull back on lowered spending by packaged goods companies.
The packaged goods sector has become a battleground between online shopping giant Amazon and other e-commerce sites and traditional brick-and-mortar grocery stores and discount retailers. Price wars and changing consumer tastes have turned some of the once mainstay brands into virtual commodities, with less supermarket shelf space and now less marketing clout.
WPP CEO Sir Martin Sorrell told CNBC that consumer products companies are not seeing volume growth.
"Anybody who runs a packaged goods company, or has been involved in it, knows when the volume starts to slide that's where their issues are," Sorrell said. Consumer staples companies have also been challenged by activist investors to cut costs. "They are going to have to invest more in innovation and branding," he said.