WPP’s strategy for growth: industry analysis

WPP’s new ‘creative transformation company’ positioning marks out clear territory in the era of data- and technology-led marketing, and especially against the management consultancies. Not to mention S4 Capital.

It’s refreshingly counter-intuitive at a time when the industry is pursuing anything with ‘digital’ or ‘data’ in its positioning statement.

It is also bold in re-asserting the power and role of creativity in building brands and business. It’s a lot to live up to, but clearly WPP see a real need to invest in its core competency, especially after some high profile losses.

It will please the creative community, who may have been inclined to steer clear of WPP given recent events.

So far we’ve seen relatively little about media, which accounts for a massive share of WPP’s scale and even more of its profit. The only public comment about media reported so far is Mark Read’s statement that:

“It’s clear that scale has moved from buying power to the power of intelligence, and the heart of that is data.”

This will be news to the media-owners and quite a few of WPP’s own people.

And so far it isn’t clear how WPP will deploy its considerable data assets such as mPlatform to drive the ‘power of intelligence’.

Overall it’s a positive shift in positioning but unclear how big parts of the company will fit in. Now the real hard work begins.

One of the hoariest clichés you’ll ever hear about the ad business is that the assets go up and down every day in the lift. Even today when the lift is equipped with the latest AI algorithms it’s still the people that make it go.

WPP has, it seems, turned itself into a creative transformation business. That sounds like a sensible idea – certainly it’s hard to argue with (I would guess there’s little appetite for an unimaginative business interested in staying exactly where it is) but just like the lift it’s the people who will make it go.

The question, it seems to me, is not will WPP successfully mutate, but rather what is the point of a holding company these days?

Clients want flexible, nimble organisations able to work with others of a similar nature to deliver brilliant transformative solutions for their businesses. Is this more or less likely to happen if the organisations selected are owned by a common parent? Or independent of any organisational pressures and processes from above?

Will the people charged with delivering creative transformations be allowed the freedom to flourish, to spread their wings? Or will they still feel the need to (in the words of the dear departed leader) ‘fight nicely’? to deliver the numbers, quarter in, quarter out?

It’s the people who will make it happen. Does WPP have enough of the right people; and the corporate spirit to let them fly? Maybe.

But if I was a betting man I would have a flutter on the independents.

WPP CEO Mark Read’s strategy review doesn’t put a foot wrong…but will it be enough to counter the serious structural and cyclical headwinds he refers to as recent account losses (including Ford and HSBC) materialise into diminished 2019 revenues?

Organising the business around and clearly communicating four key verticals is a good idea. WPP had become sprawling and incomprehensible as had its internal P&Ls. It can now pitch clients with a much clearer offering.

However, every one of these verticals is seriously challenged. For example:

Communications: Still – how to make money out of creativity?; oversupply and cut-throat competition in media buying; fewer scale advantages in public relations, public affairs or healthcare

Experience: a glut of capable niche competitors in a space where scale doesn’t matter; potentially lower margins?

Commerce: Management consultancies!

Technology: GooBook; agile start-ups everywhere; and management consultancies, again.

But short of the impossible – reinventing the world’s largest ad business as something else entirely – it’s the right way to go.

Read must use his new ‘Executive Committee’ ruthlessly to drive internal alignment as well as business stabilisation and development. Indeed, the latter will flow from the former.

Will investors give him and his top team the time to effect change and deliver results? Nothing can turn things round in a quarter, which is what many seem to want.

An aside – as the biggest media buyer, he’d also do well to lead the clean-up of the sector’s deservedly tarnished reputation.