Agency network WPP is set to double down on growing its artificial intelligence offerings, which will include an investment of $317 million (£250 million) this year, but it won’t forget about its roots in creativity, CEO Mark Read said.
Speaking with ADWEEK ahead of WPP’s Capital Markets Day previewing its plans for the year ahead, Read discussed the need to retain human judgment within its AI strategy, its ability to enhance human creativity and his hopes for business growth in the U.S. this year.
The operating strategy has been outlined as the business is thought to have underperformed with its financial results. WPP issued an expectation of 3% like-for-like revenue growth. By comparison, last week, French competitor Publicis Groupe announced organic growth of 6.3% for the year.
Looking ahead, WPP expects a flat year of revenue growth, between none and 1% in 2024.
Publicis also announced its plans to invest $325 million (€300 million) over three years into AI development across its business, including the introduction of centralized platform CoreAI.
“In the past five years, as I write, WPP’s share price has fallen nearly 20%, while Publicis’ has risen over 60%, Interpublic Group’s over 40% and Omnicom Group’s over 20% (Dentsu’s has been a slightly worse performer than WPP’s.) Investors will be looking to see whether WPP’s plans can turn this situation around,” explained financial analyst Ian Whittaker about the importance of the event.
The AI outlook
The strategy outline sees WPP aim to build on its 2021 acquisition of Satalia, while underlining its partnerships with Adobe, Google, IBM, Microsoft, Nvidia and OpenAI to build AI models and supply AI-enhanced services and tools through its WPP Open technology platform.
“We’re using AI in anger with our clients; how we’re using it to accelerate in the heart of the creative process, how we’re using it to create production-quality work for clients,” he claimed.
Alongside its current user base of 28,000 people, WPP Open will be used as the centralized platform for key clients such as L’Oréal and Nestlé to access AI services such as proprietary data sets and marketing performance data.
“To stand out, clients are going to need that judgment and human creativity,” said Read, noting the importance of the business’ leadership across its agency brands.
Read explained that the money would be invested across WPP’s media suite to help clients access and use AI tools, as well as its creative studio, media, production and commerce offers.
“What that enables us to do is analyze briefs and create images, all in all in a safe way, and I think that’s going to be really impactful, as well, across the organization,” he explained of the creative studio.
Read added that the AI investment was unlikely to be used to fund any mergers and acquisitions activity to bolster the offer, citing Satalia as leading WPP’s proposition.
In 2024, WPP is targeting savings of $222 million (£175 million) from an efficiency drive. with a further cost saving of $158 million (£125 million) eyed in 2025.
At the start of the year, the merged operations of VMLY&R and Wunderman Thompson officially began life as VML, forming the largest creative services agency in the world, while in July, public relations consultancies Hill & Knowlton and BCW will be combined to create Burson.
As a result, AKQA, Ogilvy, VML, Hogarth Worldwide, GroupM and Burson now represent 90% of WPP’s business.
The creation of VML was the latest merger during Read’s tenure as WPP CEO, which has seen him aim to simplify the company’s structure and offer greater scale in tandem. This will continue to allow the business to offer the creative transformation services it began to lay out five years ago while competing with the emergence of larger consultancy operations such as Accenture and Deloitte, which have encroached on the scene.
Improving the performance of GroupM and America
Read has previously spoken about a plan to streamline GroupM—a strategy that the media agency business’ global CEO, Christian Juhl, has been spearheading for some time. This approach has led to agencies Wavemaker, MediaCom and Mindshare becoming more integrated to offer common products and technology platforms.
“It’s going to enable us to make it more efficient and invest more. What matters to clients are great teams and people and client service,” stated Read.
This move is partially aimed improving performance in North America, where WPP recently promoted Sharb Farjami to GroupM’s North American CEO, succeeding Kirk McDonald.
Having won the Nestlé media pitch for Europe, Read said he felt that GroupM had done “very well” globally, but admitted that it had experienced a tougher time in the U.S. due to the number of reviews it faced into 2023.
“We’re looking at a much smoother picture so far in 2024,” he added. “We have a really strong new business pipeline.”
He also pegged recent difficulties in U.S. growth on declining spending from technology clients such as Microsoft, Apple and Google, which are based there.
“We work with three of the world’s four most valuable companies, and we have an unparalleled set of relationships with them,” said Read. “It turns out that in 2023, that was not to our advantage. In the long run, it will be.”