Just coming off of the consolidation of JWT and Wunderman and VML and Y&R, WPP has presented a new vision to become a leader in creativity and technology.
The strategy, which emanates from a strategic growth review, incorporates simpler, improved offer designed to capture the opportunities of a changing marketplace, and a streamlined structure built around the needs of clients.
It also includes additional investments in creativity, technology and talent to enhance WPP’s proposition to clients and drive top-line growth.
According to the release, WPP expects to deliver organic growth (defined as like-for-like revenue less pass-through costs growth) in line with its peers at a headline operating profit margin (excluding associates) of at least 15% by the end of 2021 as a result of the strategy.
The company will reportedly incur cash costs for restructuring of $374,527,200.00m over the next three years to deliver estimated annual savings of $343m by the end of 2021, approximately half of which will be reinvested in the business.
Mark Read, Chief Executive Officer of WPP, said:
“What we hear from clients is very consistent: they want our creativity, and they want us to help them transform their business in a world reshaped by technology. This is at the heart of what we do.
“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, including Volkswagen’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.
“We describe our approach as ‘radical evolution’: radical because we are taking decisive action and implementing major change; evolution because we will achieve this while respecting the things that make WPP the great company it is today.”
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WPP will host a presentation for investors and analysts today at its new headquarters in London.
Key points of the presentation, which will also be webcast, include:
Opportunities in a Changing Industry
Technology is rapidly reshaping our sector, presenting challenges but also opportunities. We believe the industry is facing structural change not structural decline. WPP is adapting at speed to capture these opportunities and to become even more client-centric than it is today.
Vision, Purpose and Identity
WPP’s vision is to be a creative transformation company, bringing together creativity and expertise in technology and data – with the purpose of building better futures for its people and clients. This competitive positioning was developed in consultation with our people and clients, and is supported by a refreshed brand identity created by WPP agencies Superunion and Landor.
Simpler, Improved Offer
WPP’s future offer will cover four areas: communications, experience, commerce and technology. Each of these areas is critical to success for modern clients, and by bringing them together the company will better serve clients’ needs as they react to the changing marketplace, and expand WPP’s own business in high-growth sectors.
A Renewed Commitment to Creativity
WPP’s most important competitive advantage is its creativity. It is what makes WPP special and what differentiates it from other professional services firms. WPP has significant creative strengths, having won the “Holding Company of the Year” award at the Cannes Lions International Festival of Creativity for seven consecutive years between 2011 and 2017 – but the business must invest more in this area.
As part of this strategic review, WPP is making a renewed commitment to creativity, investing an incremental £15m a year for the next three years in creative leadership, with a particular focus on the United States.
Technology, Data, Partners and Platforms
Alongside creativity, we will accelerate and promote our technology and data capabilities as clear sources of competitive advantage to WPP. We will follow a consistent approach across WPP by adopting a common technology strategy, leveraging the strengths of our unique technology partnerships, and making our significant existing capabilities in marketing and advertising technology available to all WPP companies for the benefit of our clients.
Simpler Structure
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. Therefore, central to the new strategy is a simpler structure, built around the needs of clients, to allow easier access to WPP’s many resources. The structure is based on three principles.
This all does not come without a price as Ad Age has confirmed that the holding company will eliminate 2,500 jobs over three years – about 1.9 percent of its global workforce of around 134,000 people.
WPP has been affected by clients cutting back on spending, especially Ford Motor Co. which it lost last October.
Source: WPP
