At the end of a difficult year that saw key accounts lost, a steep stock drop and the departure of founder turned gadfly Martin Sorrell, WPP chief executive Mark Read on Tuesday presented the company’s three-year plan for growth, the results of a comprehensive strategic review.
•Key takeaways: About £300 million in costs cuts over the next three years, simpler structure, offloading under-performer units and, of course, layoffs: Read said that WPP will reduce its 134,000 workforce by 3,500, or around 2.5%, but…
•New hiring: A significant chunk of the cost savings, about £15 million a year for the next three years, will be reinvested in new technology and talent—as many as 1,000 new creatives, with a focus on the U.S.
•The Message: Aside from the obvious benefits of promising to cut costs (the stock jumped sharply Tuesday morning), WPP seems to have heard marketer anxieties about the increasing complexity – and inscrutability –of marketing and communications services, and is promising to simplify things: “WPP has become too unwieldy, with too much duplication. As a result it is not always as focused or as fleet of foot as it needs to be to satisfy the needs of all our clients around the globe.”
•Simpler how? WPP will be organized along four key areas:
- Communications: advertising, content, media, PR and healthcare
- Experience: the creation of new brand, product and service experiences;
- Commerce: helping clients succeed in marketplaces like Amazon and Alibaba
- Technology: WPP wants to work with CMOs and CIOs to build marketing technology.
WPP said that the non-communications work already represents one-quarter of its revenue.
•How are they positioning this: If the consulting houses are promising digital “transformation,” WPP wants to be known as a “creative transformation” company. The new positioning is being pushed via a new brand identity by WPP shops Superunion and Landor. (More about that here.)
•And we quote (Mark Read): “We are fundamentally repositioning WPP as a creative transformation company with a simpler offer that allows us to meet the present and future needs of clients. This more contemporary proposition has already helped us to win new business, includingVolkswagen’s creative account in North America.
“The restructuring of our business will enable increased investment in creativity, technology and talent, enhancing our capabilities in the categories with the greatest potential for future growth. As well as improving our offer and creating opportunities for clients, this investment will drive sustainable, profitable growth for our shareholders.”
•Is this an oxymoron? “We are beginning a multi-year improvement programme and 2019 will be a year of investment in the business with the execution of our cost-savings programme and further actions taken to return the company to long-term sustainable growth.” – David Brown