Shares in the company, run by Sir Martin Sorrell, closed at 406.5p yesterday, their highest level for some time and a rise of 7.6% on the previous close. WPP was boosted yesterday following good news from Iraq as the Americans secured their position in the capital city Baghdad.
However, around midday today the shares had dropped back by more than 5% to 382p on the news that Ford plans to cut 20%, or $6bn (£3.9bn), from marketing and administration budgets over the next two years, as part of a $9bn cost-cutting plan.
Credit Suisse First Boston added to fears by issuing a research note that said: "We continue to be concerned about the potential squeeze that Ford may put on WPP, given the former's tight financial predicament."
WPP agencies, including Young & Rubicam in the US and Ogilvy & Mather in Europe, work on Ford accounts including Lincoln Mercury, Jaguar, Volvo and Land Rover. J Walter Thompson handles the main Ford advertising account, worth $1.4bn. The motor giant accounts for some 7% of WPP's revenues.
Ford recently rescinded a decision to shift all of its marketing and advertising into the WPP Group, after an internal inquiry. Questions were raised over the appointment because of the friendship between Sir Martin and Sir Nick Scheele, president and chief operating officer of Ford.
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