WPP presentation deck shows how the world's biggest advertising company plans to reverse declines by pushing into tech and e-commerce

  • WPP execs laid out in a December 17 presentation how the world's biggest ad network plans to return to growth by focusing heavily on tech and e-commerce.
  • WPP plans to separate its business into four parts: traditional communications, consumer experience, technology, and commerce.
  • WPP said merging weak creative agencies with growing digital firms like VML has been a success.
  • The big winners will be those merged networks, as well as tech businesses like programmatic platform Xaxis and targeted TV ad company Finecast.
  • Visit Business Insider's homepage for more stories.

The world's largest advertising network WPP laid out a presentation to investors and analysts showing how it plans to return to growth by pivoting to tech and e-commerce services.

The five-year plan, developed with McKinsey & Co., has WPP streamlining global operations, moving away from traditional ad campaigns that have become less lucrative, and doing more consulting work for advertisers.

"We don't just want to be the biggest," CEO Mark Read said. "We want to turn being large into an advantage [for clients]."

The company plans to grow e-commerce, customer experience, and tech work to 40% of its global business by 2025 from 25%. This means less focus on the ads that made WPP famous, despite a slide that promised it had "renewed our commitment to creativity."

The presentation came days after WPP and Deloitte acknowledged in a regulatory statement that they undercounted losses from 2017-2020 by around $409 million.

A WPP spokesman said the accounting adjustments go back more than 10 years and do not affect operating profits, though they did increase the record pre-tax loss WPP reported in August from about $3.54 billion to $3.94 billion.

Below are key slides from the 88-slide presentation.

Key growth areas across WPP's business include digital communications and PR.

WPP says the key areas of growth include digital services and practices like healthcare marketing, ecommerce, customer experience design, and public relations, that have grown during the pandemic.

WPP also says 80% of its business comes from integrated networks formed by agency mergers.

Creative agencies have faced bigger challenges than media and digital for years.

Read said WPP had gone through four negative quarters when he took over in 2018 and ranked fifth among the six major holding companies by growth because of the struggles of its creative agencies.

Old-school names like Y&R and J. Walter Thompson struggled to grow while digital firm VML and media network GroupM remained strong.

The company was too complex, leading him to merge many of its agencies.

CEO Mark Read argued that agency consolidation has been a winning strategy.

Read has overseen several major agency mergers, combining VML and Y&R to form VMLY&R, Wunderman and J. Walter Thompson to form Wunderman Thompson, and AKQA and Grey to form AKQA Group.

He argued that this strategy has been a success, citing growth of VML and Y&R.

In a further sign of confidence, Read merged retail marketing agency Geometry into VMLY&R last month to create VMLY&R Commerce.

Media network GroupM remains at the center of WPP's empire.

WPP called GroupM, the world's largest media planning and buying firm, "a jewel in the crown of our business."

GroupM has increased its share of the global digital ad market as digital overtook other forms of advertising for the first time this year.

Read said WPP handles $10 billion in annual spending across Google, Facebook, and Amazon, making it those companies' single largest client.

WPP will separate its business into four practice areas.

 WPP will separate its business into four key practice areas in the second half of 2021:

  • Communications, or traditional advertising and PR
  • Experience, or customer experience management and design
  • Commerce, with a core focus on online shopping
  • Technology, or martech and adtech

The company is racing to catch up with advertisers that are focusing on tech and less on traditional advertising.

WPP wants to win new business in areas like healthcare and financial services.

Read sees a growing number of accounts going up for review in the coming months.

Most recently, Coca-Cola launched a massive pitch for its multi-billion-dollar global business.

WPP sees opportunity for growth with packaged-goods, tech, and healthcare companies that have seen sales increase during the pandemic as well as financial services.

Media, customer experience, and martech companies are possible acquisition targets.

Read has said WPP is ready to start investing again.

The company wants to recover from the pandemic within the next two years so it can fund around $300 million to $650 million in annual M&A.

It plans to focus on companies that could be fully integrated into WPP's business and provide newer services like e-commerce and martech consulting as well as traditional creative work.

Overseas markets China, India, and Brazil will be key investments for WPP.

WPP gets 30% of its business is outside the US, UK, and Western Europe, and that share is growing.

The company plans to invest more in these countries as they continue to account for a larger share of the global digital ad market.

Tech platforms Xaxis and Finecast will be big winners in WPP's new lineup.

As an example of tech investments, WPP execs highlighted Xaxis, which manages programmatic ad spend, and a new partnership with Finecast, which targets viewers of streaming and live TV services with personalized ads.

Read said Xaxis doesn't rely on cookies, so it can help clients navigate a privacy-focused world.

For example, the presentation featured a campaign where Xaxis and WPP agency Grey used AI to create more than 2,300 separate ads targeted to individual users.

A data-focused project for Walgreen's is one example of how WPP's work will look moving forward.

Read said WPP wants to help clients manage their own customers' data rather than acquiring a massive "legacy data business" like Dentsu's Merkle, IPG's Acxiom, or Publicis Groupe's Epsilon.

He cited a project in which several agencies worked with tech partners Microsoft and Adobe to create a custom app for Walgreen's Boots Alliance, which retained WPP as its agency of record after a recent review.

The company plans to save $815 million per year by cutting real estate and other costs.

WPP wants to save around $815 million annually by 2025 by cutting travel and personal expenses by one-third, slashing real estate costs by 15% to 20% through investment in centralized "campuses," and sharing services like IT and finances across agencies. It also plans to automate some operations.

New business reports show WPP outperforming rivals during the pandemic.

WPP touted a new report from management consultancy R3 that showed WPP outperforming rivals Omnicom and Publicis Groupe in terms of revenue and new business wins on the creative and media side through new or expanded relationships with brands like Alibaba, Uber, Unilever, and HSBC.

The company is developing a new career hub to retain top talent.

The company said it's developing a platform called Career Explorer to retain talent and reinforced its commitment to diversity goals while acknowledging it needs to do more on gender and racial equality efforts.

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