WPP CEO Mark Read on Continued Simplification, ChatGPT and Kantar

WPP expects demand from clients to remain strong for the coming year having recorded a like-for-like revenue increase of 6.7% for 2022 while continuing to evolve its operating model and structure. It now also faces speculation that it may sell off its remaining 40% holding in data and research business Kantar.

The agency network, which owns Ogilvy, GroupM and Wunderman Thompson, released its preliminary results for 2022, with revenue reaching $17.3 billion (14.4 billion pounds) and a headline operating profit of $2.09 billion (1.742 billion pounds)—a year-over-year growth of 10%.

With a guidance of growth of 3% to 5% for the year and a continued focus on simplification of its structure and cost savings through the introduction of further campuses internationally, its chief executive Mark Read has stated his confidence for the year ahead, despite potential economic headwinds including the ongoing war in Ukraine.

“Clients were more confident in private than they were in public,” theorized Read while discussing the growth forecast for the business and how that would be met by client spend over the coming months. “Everyone was rightly cautious and the general view is the world economy is in a better place today than people feared it would be back in October and November.”

Kantar sale speculation

Speculation around its future investment within Kantar, which it owns 40% of after selling 60% to Bain Capital Private Equity in July 2019, began in the post-results call after it was revealed the performance of that business was “stripped out” of WPP’s results to be “cleaner” in reporting the company’s earnings.

“We’d have to see” he explained, adding that it was clear what the process would be for such a sale or what the situation would be when that opportunity arose. “We’re very pleased with the decision we made to retain 40% and we’re very aligned with Bain Capital on the investment deal,” said Read.

There was also continued demand for PR services with a 21% increase in like-for-like revenue growth. Read explained that clients had recognized the power of communications within their brand strategies. That was especially true around purpose and ESG which was aiding the “strong” performance for its agencies such as Hill+Knowlton which delivered double-digit growth.

Ogilvy was also singled out for its “strong performance” over the year and production company Hogarth recorded double-digit growth for the year as more clients invested in production.

For the year, the company recorded new business of $5.9 billion (4.9 billion pounds), including new assignments with Audible, SC Johnson and Verizon.

Continued simplification and transformation

Having completed the most recent internal merger to create EssenceMediacom, a super agency within GroupM with 10,000 employees across 120 offices, Read has continued the mission to simplify the structure of WPP to meet client and sector demands. That strategy was also followed last year with the merger of Super Union and Design Bridge as well, but Read was not forthcoming on whether any more similar moves were planned for the coming year.

2022 also proved to be the year that the business operated in a manner that he could see being largely the model for the future of WPP, with employees returning to the main to offices for three days a week while continuing to work in a hybrid manner.

Despite the company’s headcount growing by 9% year-over-year to reach 114,000, seeing staff costs also grow by 17.5%, a target to save $722 million (600 million pounds) by 2025 remains “on track.” Read admitted that travel was one area that he expected would be another area of continued savings with staff expected to use technology for meetings more “unless necessary.”

As part of its “Transformation program” gross annual savings were made of around $451 million (375 million pounds), with savings made across property, procurement and working.

The business now has 37 campuses internationally where its agencies share space, with five having opened in 2022. Another five or six are expected to be opened in 2023 which will drive further savings in flexible working and IT.

Read also acknowledged that while leadership statistics are not yet 50/50 when it comes to gender parity, it’s a goal he is determined to achieve. He admitted however that more work has to be done when it comes to representation from non-white ethnicities, which is still a work in progress for the business.

The use of AI

During the results conference, Read presented three examples of campaigns developed by WPP agencies that involved the use of artificial intelligence, including the Nike campaign featuring Serena Williams playing various versions of herself throughout her career. This was created by AKQA last summer to celebrate the brand’s 50^th anniversary with the help of AI technology to predict her responses based on her career.

“What’s important about this work is the ability to use AI, not just to reach and target new audiences, but also to tailor the creative to those new audiences,” he said of another campaign for Cancer Research to help drive awareness and donations.

Admitting he had used ChatGPT himself, he could see that it still has its issues for creators in terms of copyright and accuracy, and that WPP had yet to introduce any use policies around where and how it should be used internally.