WPP Seeks to Leverage Production Growth as Hogarth Takes the Lead

WPP’s CEO Mark Read struck an optimistic note as he led the holding company’s Capital Markets Day presentation today, Tuesday January 30th. Acknowledging the holding company's 'slower growth' in 2023, he and the team lent into WPP’s structural simplification, AI-driven future and strategies for growth.

Much of the presentation focused on the AI technology and platforms that the holding company believes will both create efficiencies for the bottom line and up opportunities for clients - as well as the more streamlined WPP structure which has seen the selection box of agency networks whittled down to just six hero brands (VML, AKQA, Ogilvy, Hogarth, groupM and Burson). 

There were plenty of high tech revelations, including a deep-dive into WPP’s ‘WPP Open’ and Satalia platforms and tailored client AI workspaces or sandboxes that allow creatives to generate copy and content trained on the client values, assets and tone of voice, and the audience ‘brains’ that use machine learning to predict and explain audience reactions to work.

But beneath the headline-grabbing AI tools and platforms that are touching the whole business, another theme that emerged was WPP’s laser focus on production as an enormous financial opportunity and lever to further integrate the various arms of the company.

“Our production capabilities are both strong and also have significant growth opportunities. Clients spend roughly the same on production as they do on creative fees, and today we capture only a small part of that,” said Mark Read in his opening remarks.

Later on, Hogarth CEO Richard Glasson took to the stage where he revealed that Hogarth has completed its quest to subsume and integrate the various production units from across WPP. That means that Hogarth now has 7,500 employees. Richard makes the argument that Hogarth is outpacing similar production units at other holding companies.

“We've recently completed the consolidation of various other parts of WPP’s various production entities which existed within WPP into Hogarth, which now means that we’re 7,500 people globally, which actually makes us probably more than twice the size of our nearest competitor. It means that we're very clearly the market leader in the world of production,” he said.

This scale, Richard said, puts Hogarth in a strong position to find growth in a space that is largely dominated by independents. To put a figure on it, he said that WPP conservatively estimates that the global commercial production market is worth about $50 billion, and they hope to make a net $1 billion in sales over the next two-three years, which constitutes about 2% of the market. That leaves a lot of open ground.

“The reason that I believe that [scale] matters is that production, up to this point, has been a highly fragmented market. It's been a market with a lot of boutique suppliers in there. And actually, the consolidation is really starting to happen because the consolidation is necessary for our clients because they need to have access to the best innovation. They need to have access to the tools and technologies which we’re developing, and to the partnerships, which we're embedding within WPP,” said Richard.

Hogarth’s scale and integration within WPP is also aiding the streamlining of the whole holding company. “We're also an engine for integration within WPP,” he said. “So we work with all of the creative agencies that you've seen here today. And we have a deep integration with GroupM. You can think of us almost as the connective tissue across WPP, which enables WPP to offer true end-to-end capabilities, and brings together creative and production and media in a simple and compelling way for our clients, in a way which I don't think is replicated elsewhere in the industry.”

According to Richard, at least part of the opportunity comes from the sky-high demands for always-on content.

“The reason I think production is such an exciting place to be at the moment is because all of our clients have to think about how they can produce work every hour of every day, they have to produce work across every channel, they have to think about their different audiences, they have to think about different markets, different cultures, you can respond to things that are going on in the real world, you can take real time data, coming back from various cues, you can respond to changes in weather, you can respond to the time of day. So what that means is that all of our clients have a virtually limitless need for work across every channel. And that creates a huge opportunity for us.”

The opportunity doesn’t just lie in the sheer volume of content clients need, Richard positions Hogarth’s focus on technology and innovation as key. As with the rest of the day’s presentations, Richard demonstrated how AI and real-time creation were being deployed for clients like Ford.

“We're also helping our clients to innovate into the future, to think about different ways of making work to use emerging tools and technology to ensure that their work is capable of addressing the changing needs of their consumers. We can now talk to consumers and engage with consumers on behalf of our clients in a way that simply wasn't possible in the very recent past. And again, that's what's creating the big opportunity for us. And that's why we believe that production is an area that everybody should be taking very seriously as a business.”

Since joining WPP in 2010, Hogarth has exploded from its base of 100 employees. Between then and the end of 2023, Richard says they’ve grown by over 60 times in every key measure and has had a compound growth rate of 10% over their entire life at WPP.

“We've got a huge runway ahead of us in terms of the foundations we've laid in the business, and the growth that's ahead of us,” he said. “And we strongly believe that it will be an engine for growth for WPP in 2024 and beyond.”