News

WPP agencies, offices and jobs facing axe as firm embarks on ‘radical’ overhaul

WPP has become too unwieldy, with too much duplication, the holding group has said, noting it needs fewer companies in order to return the business to growth.

According to a statement released overnight, WPP will become “a more client-centric” organisation. with fewer companies. Those remaining will be “more integrated to adapt to a changing market”, the firm said.

In addition there will be further integration at a country level “to leverage our strengths in individual markets”.

The planned overhaul at the company is expected to see the closure of 80 offices across the world and the merger of a further 100 where business has been sluggish.

As many as 3,500 jobs will be lost although it will recruit 1000 creative staff.

It is unclear what the implications are for Asia.

“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,” chief executive Mark Read said.

The statement follows recent high-profile consolidation at WPP.  Last month it announced plans to merge the iconic J. Walter Thompson agency and Wunderman, to create Wunderman Thompson and in September began stitching together Y&R and VML to form VMLY&R.

WPP CEO Mark Read preparing for a “radical evolution”

Read flagged the group would be looking at “right-sizing and disposal of under-performing businesses” with the closure of unsustainable operations and establishing a consistent shared service infrastructure to support 30 countries over the next five years.

Along with the changed focus, the company’s restructure aims to deliver annual cost savings of £275m (S$472m) by the end of 2021 and divest part of its stake in research house Kantar next year.

The holding group also conceded there were still challenges ahead.

Its “multi-year improvement program” and “cost-savings program” will not be enough, with the company admitting there will be “further actions taken” to return the company to long-term sustainable growth.

In addition, recent account losses will create headwinds as 2019 kicks off, the group said.

Despite the tough times ahead, Read said the new, more contemporary, WPP will become a leader in creativity and technology.

“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,” he said. “As well as improving our offer and creating opportunities for clients, this investment will drive sustainable, profitable growth for our shareholders.”

It is, he said, a “radical evolution” for the legacy company.

“We describe our approach as ‘radical evolution’: radical because we are taking decisive action and implementing major change; evolution because we will achieve this while respecting the things that make WPP the great company it is today.”

The global repositioning as ‘creative transformation company’ will see the group focus on merging its creative assets with its technology and data expertise as the company looks to grow its e-commerce, technology and user experience offerings.

Read said in the statement: “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.

“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.”

ADVERTISEMENT

Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella Asia newsletter now.

 

SUBSCRIBE

Sign up to our free daily update to get the latest in media and marketing