During today’s extended investor day conference, WPP CEO Mark Read positioned his business not as a formerly dominant network pivoting to retain its relevance, but as a “creative transformation company” best fit to serve a new kind of economy.
At the very least, he said, WPP will deliver 15 percent margins by 2021 as part of a strategy that will keep it “in line with its peers” by streamlining the holding company’s global structure and reinvesting in tech assets and creative talent—especially in the United States.
This means cutting approximately 3,500 jobs, or more than 2.6 percent of WPP’s global workforce, over the next three years. A company executive speaking on background said the net reduction after reinvestment will be approximately 2,500, meaning WPP plans to hire around 1,000 new staffers before the aforementioned 2021 deadline.
The same executive said these layoffs will primarily concern “back-office areas rather than creative and other client-facing areas” but declined to elaborate. Later in the conference, WPP confirmed that it will be closing 80 unspecified local offices, combining 100 more and disposing of 16 “non-core or underperforming businesses.”
Perhaps most significantly, the company will not be merging any more of its agencies for the foreseeable future, despite widespread rumors regarding specific creative, digital and media shops that have swirled around the industry since the unions of VML, Y&R, Wunderman and J. Walter Thompson became official.
On that note, Read implied that many of the most dramatic changes in his “radical evolution” strategy have already taken place.
“We can’t be nostalgic about brands that have been around, and we have not been,” Read said in an apparent reference to Y&R and JWT. “The word ‘radical’ means we have to make tough choices … in the first three months, we’ve made some of those,” he added, listing the two agency mergers and a restructuring of the company’s healthcare offering.
Read also indirectly pushed back against criticisms framing those announcements as pure cost-cutting measures.
“WPP needs to grow; cost reduction will only get us so far,” he said while noting that his goal is to create “fewer but stronger companies” and acknowledging that jobs will “unfortunately” be eliminated in the process.
The presentation also stated that WPP will “integrate further at a country level” in the interest of becoming more focused on its clients.
According to the company’s statement, WPP will “incur cash costs” of approximately $375 million over the next three years for the restructuring in order to achieve just under $350 million in annual savings, half of which it will reinvest.
Read said that reinvestment will simultaneously work to strengthen WPP’s creative and technology offerings.
“Creativity is an oft-used word, but we need to put it back at the heart of WPP,” he said, citing Essence’s work for Google to argue that the network needs to partner with both CMOs and CIOs because “technology underpins everything we do.”
Unsurprisingly, tech was a running theme throughout the presentation, which stated that WPP’s “future offer” will focus on the four core areas of communications, experience, commerce and technology. Read made a veiled reference to predecessor Martin Sorrell when he said WPP should treat its tech partners “not as frenemies or competitors, but as clients.”
He also expressed disdain for the still-extant digital divide in advertising. “Digital is a word that has been banned from WPP. That artificial distinction between analog and digital is not helpful,” he said.
In other words, all things are now digital. Or, as another executive put it, “all commerce is ecommerce.”
An entire segment of the conference concerned WPP’s relationship with Amazon, highlighting its 2017 acquisition of Amazon specialist agency Marketplace Ignition and subsequent hiring of talent from Jeff Bezo’s online sales monolith.
After Read’s presentation of the company’s new visual identity or logo, WPP global chief client officer Lindsay Pattison told viewers that it received a standing ovation when first presented to executives at an October strategy meeting in Brooklyn.
Executives from agencies including David Miami, Wunderman, Essence and VMLY&R then proceeded to give their own presentations, which universally demonstrated the success of tech-driven creative projects for clients like Burger King and Adidas.
While Read and other WPP executives have told journalists not to expect more big merger-style announcements, the company will be hiring. The release states that WPP plans to invest just under $19 million each year on “creative leadership, with a particular focus on the United States.”
Finally, the company has established its first executive committee consisting of company and corporate leadership in order to help implement this plan and attract top talent.
As Read put it, “Culture is maybe not a word we’ve been comfortable talking about at WPP.”
A spokesperson declined to share details regarding the executive committee at this time. WPP’s stock price on the New York Stock Exchange had risen approximately 3.5 percent today at the time this story was published.