Creativity, Tech, Data, Simplicity Central To WPP’s Turnaround Strategy

WPP’s strategic review has set out a new plan to return the business to growth. The strategy reflects a new vision for WPP as a leader in creativity and technology. It incorporates a simpler offer designed to capture the opportunities of a changing marketplace, and a streamlined structure built around its clients. It also includes additional investments in creativity, technology and talent to enhance WPP’s proposition to clients and drive top-line growth.

The new strategy will also mean WPP will decrease its global staff by around 33 percent (3500 jobs).

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 percent by the end of 2021 as a result of the strategy. The company will incur cash costs for restructuring of GBP 300 million over the next three years to deliver estimated annual savings of GBP 275 million by the end of 2021, approximately half of which will be reinvested in the business.

“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,” said Mark Read, Chief Executive Officer of WPP.

He explained that the business restructuring will enable increased investment in creativity, technology and talent, enhancing WPP’s capabilities in the categories with the greatest potential for future growth. As well as improving its 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,” Mr Read commented.

WPP’s future offer will cover four areas: communications, experience, commerce and technology. Each of these areas is critical to success for modern marketers. The Holding Company believes that by bringing these together, it will better respond to the changing marketplace.

As part of this strategic review, WPP is making a renewed commitment to creativity, investing an incremental GBP 15 million a year for the next three years in creative leadership. WPP will accelerate and promote its technology and data capabilities as clear sources of competitive advantage to WPP.

Stated that it has become too unwieldy, with too much duplication, a simpler structure is central to WPP’s new strategy. The structure is based on three principles — WPP will become a more client-centric organization; it will have fewer, more integrated companies equipped to adapt to a changing market and it will integrate further at a country level to leverage its strengths in individual markets.

The Board of WPP has also decided to develop Kantar with a potential strategic or financial partner, with WPP retaining a significant minority interest and strategic links with Kantar. Proposals will be evaluated on their financial and strategic benefits and if a transaction is agreed it is likely to be announced in the second quarter of 2019.

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