WPP will spend £300 million (€332 million) over three years and cut 2,500 jobs as new boss Mark Read seeks to return the world's biggest advertising group to growth.
The British company, owner of the JWT and Ogilvy agencies, lost its founder Martin Sorrell and 40% of its value in the last year. It has been forced to cut sales and profit forecasts after it lost some major clients and others cut their spending.
On Tuesday it set out its plan to respond, with a strategy to maintain its dividend and remove costs of £275 million a year by 2021 by closing offices and removing job roles that overlap across its multiple agencies.
"We need a simpler WPP, we need to invest in the future and this is the next stage in that journey," Read told Reuters.
Potted History
Sorrell, the world's most famous advertising boss, built WPP from a two-man office in central London into the world's most powerful advertising company offering creative work, media buying, public relations, consultancy and data analytics.
It outperformed rivals Omnicom, Publicis and IPG for years, but growth evaporated in 2017 due to competition from consultancies and tech groups Facebook and Google, which enable clients to cut out the middle men and place ads directly.
Clients have also complained that WPP, in 112 countries, is too complex, forcing them to deal with multiple agencies within the group to get one service.
"WPP has become too unwieldy, with too much duplication," the company said. "As a result it is not always as focused or as fleet of foot as it needs to be to satisfy the needs of all our clients around the globe."
Read, a company veteran since he wrote to Sorrell asking for a job in 1989, has sought to break down barriers between its multiple agencies, which also include PR groups Finsbury, market research firm Kantar and creative group Grey.
Collaborative Strategy
He said his new strategy was developed in conjunction with its 130,000 staff and clients which include Unilever, P&G, Vodafone and Ford.
It will maintain and prioritise its dividend, invest in the senior management in its New York creative agencies and achieve savings by merging offices, closing others and exiting some businesses.
It will lose around 3,500 jobs in areas of duplication, and hire a further 1,000 to boost its technology and creative credentials, particularly in New York where so many big agencies are based on Madison Avenue, the heart of the advertising industry.
WPP added that full-year organic net sales were likely to be down by 0.5% this year, an improvement on the 1% drop it predicted in October, after trading stabilised.
"As well as improving our offer and creating opportunities for clients, this investment will drive sustainable, profitable growth for our shareholders," Read said.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
