Following the recent WPP mashups of J. Walter Thompson with Wundermam, and VML with Y&R , WPP has revealed a £300m restructuring plan for the whole holding company. It is hoped that the three year plan will result in annual savings of £275m and a profit margin of 15% by the end of 2021, thanks to greater integration and simplification.
The new plan was revealed today ahead an investor meeting in London. Alongside the predicted organisational streamlining and beefing up of data and tech capabilities and partnership, the plan also included a ‘renewed commitment to creativity’. This nod to creativity comes just as Ogilvy revealed that it would be replacing its former Global CCO Khai Meng Tham with Piyush Pandey – at a time when ad watchers have speculated about the importance of creativity to the holding companies at a global leadership level.
WPP CEO Mark Read described the new approach as a ‘radical evolution’ and said it marked ‘decisive action’ on the part of the holding company, which has lagged behind its rivals at Publicis Groupe and Havas when it comes to wholesale restructuring.
“The restructuring of our business will enable increased investment in creativity, technology and talent, enhancing our capabilities in the categories with the greatest potential for future growth. As well as improving our offer and creating opportunities for clients, this investment will drive sustainable, profitable growth for our shareholders,” he said.
According to Mark Read, the new structure has come from client feedback. The move, he says, sees WPP as a ‘creative transformation company’ with a simple focus on four key areas: Communications, Experience, Commerce and Technology.
“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,” he said.
“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. This more contemporary proposition has already helped us to win new business, including Volkswagen’s creative account in North America.”
Creativity is seen by the group as a ‘competitive advantage’ against professional service films like the major consultancies. However, with other advertising holding companies also looking take on the likes of Accenture and Deloitte and move as far upstream as they can within their clients’ businesses, WPP is looking to put its money where its mouth is to keep ahead of the competition. A release from the group admits that ‘the business must invest more in this area’. Over the next three years, the company will invest an incremental £15m a year for the next three years in creative leadership – focusing on the United States.
Going forward, expect more dramatic changes at ground level – WPP confirmed that they expect to have ‘fewer, more integrated companies’ and greater integration at a country level.