After the VMLY&R Merger, What’s Next for WPP?

Forrester analyst predicts more consolidation is likely

WPP CEO Mark Read made a series of executive appointments
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The recent union of VML and Y&R made for more than a mouthful as VMLY&R gave the industry some insight into WPP CEO Mark Read‘s long-term plan for reinventing the world’s largest holding company after Martin Sorrell’s 33-year run.

“Mark has probably six to seven months to demonstrate to shareholders that there’s a plan in place,” an anonymous former C-suite executive at a WPP agency told Adweek. “He needs to have the courage to do a lot of restructuring.”

The person said all of WPP’s legacy creative agencies “need to be rebooted,” and praised the decision to combine legacy creative with data-driven digital, adding creative shops without that don’t stand a chance in the current climate.

"Mark has probably six to seven months to demonstrate to shareholders that there's a plan in place."
Former WPP executive

Traditional creative agencies have hit a wall of stagnant growth. During the first half of the year, WPP’s North American like-for-like sales slipped 0.7 percent, and Read said on an earnings call that a “review of strategy is underway” in which the company would address certain underperforming operations, particularly in the U.S.

In an all-staff memo following his installment last month, Read elaborated on that point: “I see WPP as a modern, vibrant organization that works as a team to help our clients succeed and grow through an integrated offer of marketing, consulting and technology services. Our spirit of creativity will always be at the heart of what we do, but pairing that with expertise in technology and data is vital.”

WPP declined to comment.

Creative can’t stand on its own anymore

“When it was announced that VML and Y&R would merge, we felt that it was appropriate and very much aligned with our research,” said Jay Pattisall, principal analyst at Forrester. In August, Forrester issued a report speculating what agencies WPP might consider consolidating including VML, Y&R, AKQA, Grey, JWT, Ogilvy and Wunderman.

Following the marriage of VML and Y&R, Pattisall said there’s “no doubt we’ll see more” similar mergers. One idea he proposed was to break up the massive Kantar, which now has nine brands: Kantar Consulting; Kantar Health; Kantar IMRB; Kantar Media; Kantar Millward Brown; Kantar Public; Kantar TNS; Kantar Worldpanel; and Kantar Lightspeed; and possibly merge its consulting practice with Grey.

AKQA and Wunderman also have the potential to be paired with one of the outstanding legacy creative agencies, according to Pattisall.

“It’s Mark’s role to evolve the company and take it forward,” he added. “It’s the rebirth of creative entrepreneurialism. It’s not that creativity is going away; it’s just being reshaped. We’re transitioning out of the model of a founder and into a model of an end-to-end global marketing entity that spans multiple capabilities.”

To that point, Pattisall said Y&R’s founders—Ray Rubicam and John Orr Young—are “iconic” but that agencies need “a new type of leader,” one who is more digitally-driven. Read, having been the CEO of Wunderman, fits that mold. So does Jon Cook, who was appointed global CEO of VMLY&R after serving in that role at VML. Y&R global CEO David Sable will become non-executive chairman while eventually transitioning into an unspecified position within WPP.

It’s the end of the Sorrell era

“Martin was the king of acquisitions,” the unnamed former WPP executive said. “Martin treated every company equally [no matter the size], and it was nonsense. It was killing WPP financially and strategically.” Even if Sorrell hadn’t resigned amid a company investigation into his alleged “personal misconduct,” this individual said the former CEO had a “sell-by date.”

"I have my strengths and weaknesses like anyone else, but one strength I'm proud of is having a good feel in scaling a culture and workplace that has a great attitude and transparent personality."
Jon Cooke, global CEO, VMLY&R

“It’s a different time” and Read is better suited to run the WPP of the future, according to the source. Sorrell’s own plan for his new venture, S4 Capital, hints at leaving traditional creative behind altogether to instead focus on the integration of consulting and tech.

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