- WPP CEO Mark Read said he’s ahead of schedule in turning around the ad giant.
- Since becoming CEO in 2018, he’s restructured WPP, sold off assets, and began beefing up its tech capabilities.
- But insiders said the company still faces major headwinds.
This article was first published in December and has since been updated.
When Mark Read took over as the CEO of WPP in September 2018, the largest advertising company by revenue looked to many industry insiders like a dinosaur confronting its inevitable demise.
Founder Martin Sorrell had exited abruptly less than six months earlier. WPP had lost significant chunks of business from important clients — PepsiCo, American Express, Mercedes-Benz — to rival ad companies . Revenue growth had stalled, and its share price had fallen off a cliff.
Analysts and observers were increasingly calling to question not just WPP but also ad holding companies in general, with their hundreds of individual agencies. The model is under threat from the shift to digital advertising, cost-cutting clients, and firms like nimble cloud-computing companies and consultancies increasingly vying for marketers’ budgets.
That December, Read laid out an ambitious three-year turnaround plan involving thousands of job cuts, a simplification of WPP’s sprawling network, and a renewed investment in tech assets and creative leadership.
This February, Read told investors that WPP had an “outstanding year” thanks to new business wins like Coca-Cola and a growing demand for e-commerce services. He said the company hit its five-year revenue goals two years early, with like-for-like revenue rising 12% over 2020 and 2.9% over pre-pandemic 2019. Investors were less confident, driving WPP’s share price down more than 10% for the day.
18 current and former WPP executives, analysts, shareholders, and clients told Insider Read has performed well so far. WPP now has reduced its total agencies and debt.
“I think Read has done a very good job — especially given the disorganized mess he inherited,” David Herro, the chief investment officer of Harris Associates, one of WPP’s largest shareholders, recently said.
But observers said Read still faces big challenges attracting talent, evolving the business model, and making a harder push into tech. For all of its talk of investment in technology, Wall Street doesn’t value it like a tech company.
Read sees the key to WPP’s success as a continuation of its efforts to balance investments in digital media and tech tools with creative talent.
“Looking forward 30 years, you have to look back at our history, our ability to invest in creativity and to adapt to changes that we’ve made in our business,” Read said in a December interview.
Reshaping WPP’s internal culture has been a monumental challenge
To hear Read tell it, his most important achievements over the past three years were his changes to WPP’s structure and corporate culture.
As soon as Read took over, he shook up everything from WPP’s board of directors to its reporting structure, slashing the number of his direct reports. A former WPP media-agency exec said Read seemed to trust agency leaders to handle their own budgets and placed less emphasis on belt-tightening than his predecessor. Before Read, this person said, “there was a perpetual sense that our finances were balanced on the head of a pin.”
Reputation was another challenge. One current exec said WPP had long been seen as an investment vehicle designed to buy up agencies and reward shareholders, rather than serving a marketing-led purpose in its own right.
“We’ve gone a long way toward moving perception of WPP from a financial brand to a creatively driven company,” Read said in December.
Read has also completely overhauled the leadership of most WPP agencies; several sources said many of those let go during the pandemic were well-paid veterans who had been there for a decade or more.
Jonathan Halvorson, the vice president of customer experience at the WPP client Mondelez, said the biggest change he’d seen under Read concerned a new team of global client leaders that manage its relationships with chief marketing officers. It’s led by Chief Client Officer Lindsay Pattison, who was one of Read’s first appointments.
In previous years, the leaders of various WPP agencies would approach clients with often contradictory perspectives. The new structure has discouraged this kind of infighting, Halvorson said.
Read’s changes that inspired the most press coverage involved merging large, historic agencies like Y&R and Grey with younger and more digitally focused firms such as VML and AKQA.
But the transition has not been entirely smooth. Several WPP execs who recently left the company called VMLY&R the most successful combination and predicted that CEO Jon Cook would continue moving up within the organization. But insiders called the Wunderman Thompson merger a hostile takeover of JWT by Read’s former employer Wunderman, whose leaders now run the agency. People also said Grey and AKQA remained two very distinct companies that never collaborated beyond new business pitches, despite having merged more than a year ago.
Read also reversed WPP’s longtime aversion to disposals, selling off assets like its minority holding in the IT company Globant and a chunk of the multibillion-dollar market-research firm Kantar to the private-equity firm Bain. (Globant’s share price has since soared. WPP’s 18.7% stake would now be worth more than $2 billion.)
When asked about future mergers, disposals, and acquisitions, Read had said, “I’m never going to say never.”
WPP wants to look ahead to a tech future
Read said WPP hoped to set itself apart in the years ahead by building out data, e-commerce, and marketing-technology services, rather than acquiring more agencies, like it did over the previous 35 years.
“We want to help clients maximize the value of their own data versus that of Google and Facebook,” he said in the December interview.
He’s stuck to that strategy since reentering mergers and acquisitions late last year by acquiring an e-commerce consultancy, an artificial-intelligence-strategy startup, and a mobile-tech firm. The only major nontech purchase during Read’s tenure has been that of the top financial-public-relations firm Sard Verbinnen by the newly formed Finsbury Glover Hering, which Read described as an opportunistic deal.
Still, Halvorson of Mondelez said technology was not the reason his company had awarded more business to WPP in the past three years.
“It’s not because they invested in tech and have better algorithms. The people make the difference,” he said.
Attracting creative talent remains tough
While Read’s M&A strategy focuses on tech, he repeatedly told Insider that creative work was the key to WPP’s future success. Analysts and execs agreed that WPP has to use creative work to set itself apart, because rivals like Accenture have offered large-scale e-commerce and tech advisory services for years. But it remains the least profitable part of the business as clients continue to drive down agency fees.
In 2018, Read pledged to spend $15 million each year on creative leadership. He made several key US hires this year, including Global Chief Creative Officer Rob Reilly and Ogilvy Chief Creative Officer Liz Taylor. WPP also won holding company of the year, the top award at Cannes Lions International Festival of Creativity, for the second year in a row.
Read has said he hoped these moves would attract more talent, but some remain skeptical.
“Creative isn’t in Mark’s bones or those of the people he employs because they come from the consulting world. And in the end, that’s an issue,” a former WPP agency leader said.
Another longtime executive at a WPP creative agency said he quit several months ago after new management split the agency’s advertising, PR, healthcare, and consulting teams into different divisions, which made collaboration more difficult.
“They talk a good game, but day to day, you get very little help or support from the rest of the business,” he said. “It’s turning more and more into a factory.”
WPP’s competition
Like all ad networks, WPP struggled early in the pandemic, laying off hundreds of employees and slashing executive pay as clients stopped spending.
Like its peers, its ad budgets soon bounced back as global economies began reopening. WPP jumped past the competition in the third quarter of 2021. It grew revenue 15.7% year over year —up 6.9% on the equivalent quarter in 2019 — and raised its revenue outlook. Last month, the network posted two of its most important wins of 2021: the lion’s share of Coca-Cola’s $4 billion global marketing business and all of Google’s ad-buying account.
But the firm’s new-business record over the past year has been mixed. It also lost key portions of the massive Unilever business to its rivals Omnicom, Havas, and Publicis, with the latter then swiping two critical accounts in Walmart and Facebook’s parent company, Meta.
The competitive landscape isn’t getting any easier for WPP. The company’s share price (in Great British pounds sterling) at the time of publication had more than doubled since a March 2020 slump, though it remained far below the highs it set in early 2017. In terms of total shareholder returns, (measured in US dollars to account for the various different currencies) smaller firm IPG has led the pack over the past three years, followed by WPP and Publicis Groupe.
For all of WPP’s recent recovery, analysts predicted only low or mid single-digit organic annual revenue growth for the foreseeable future. More broadly, there’s a market perception that agency businesses can’t keep growing at a much higher rate than that, Thomas Singlehurst, the head of European media-equity research at Citi, has said.
“The reality is that the market is just willing to apply a higher multiple to those companies in the IT-consultancy space and some of those platform businesses,” Singlehurst said.
The WPP media network GroupM’s own prediction that digital advertising overall will grow 13.5% and account for nearly two-thirds of global ad spend next year illustrates WPP’s biggest challenge, economist Tom Triscari of Lemonade Projects, a firm that advises advertisers on programmatic buying, recently said.
“Who is the winner of that money? I think it goes more and more to The Trade Desk, Criteo, Google, and Facebook,” he said.
To that point, several analysts said WPP needed to make a bigger move into tech — particularly in the area of first-party data, given the privacy-focused landscape where the tech giants have been tightening the screws on ad tracking. But they doubted Read would complete any big acquisitions in the coming months.
Bigger challenges lie ahead
WPP
One of Read’s biggest challenges is attracting and retaining talent as people flee the ad industry.
The company hired nearly 7,000 people this year and now employs about 106,000, Read had said. But the Great Resignation has required WPP to take unusual steps, like creating apprenticeships and launching a program to encourage women in their 40s and 50s to reenter the ad industry.
A former WPP account lead said the company must focus on not just simplifying its business and attracting talent but also changing its model as more marketers seek out the type of strategic partnerships that smaller, more flexible firms may be better-suited to provide.
The former media-agency exec, for their part, said all the ad giants struggled to escape the perception that they are middlemen connecting advertisers to platforms, publishers, and consumers — which means they’re often first to get cut when it’s time to reduce expenses.
The problem with focusing on data and performance marketing, this person said, is that it leads to further price-driven commoditization.
“People have been saying, ‘Be more consultative,’ for 25 years,” this person said. “This is something WPP still hasn’t cracked, and they’re not alone in that.”
“WPP is not a dinosaur, and Mark hasn’t failed,” the former WPP account lead said. “Within the space where he’s playing, he is successful. But that’s still not enough.”
