WPP CEO Mark Read on the Latest Plan to Simplify GroupM

Following the announcement that it intends to merge VML Y&R and Wunderman Thompson to create VML next year, WPP will continue its $120 million (100 million pound) simplification drive within its media business GroupM it has revealed while announcing its third quarter figures, including a surprising 1.8% decline in revenue.

The decline in revenue has led the company to lower its growth expectations for the year to between 0.5-1.0% with the cautious spending trend it witnessed before summer, particularly across technology clients. This was largely experienced within GroupM’s North America arm, despite the announcement that it had won PayPal’s global media account this week.

The financial performance within the U.S. market continued to slow for WPP at -4.2% from the previous -4.5% in Q2.

The formation of VML, announced last week, will aim to bring together two complementary businesses within WPP, results in the largest creative agency in the world with a staff base of 30,000. WPP overall employes around 150,000 people.

WPP chief executive Mark Read had previously told Adweek that he believed that the need for scale was more important than it was a year ago while explaining the latest mega merger.

With VML set to begin from Jan. 1, Read claimed together with GroupM, they will make up for 62% of its net sales and headcount.

A new approach for GroupM

The simplification of GroupM will take a different approach, rather than merging any of the agencies within the group: Mediacom, Mindshare and Wavemaker. They will now integrate to offer common products and technology platforms. A plan to streamline their collective operations and back office functions supporting client-facing agencies will also be implemented, including centralized finance, HR and IT support.

Read said that the move would not be “radical,” but it would allow the business to invest more effectively in its offer while allowing it to bring its best people to work on the biggest account opportunities as well.

This shift will also aim to improve the company’s new business performance in North America, which Read said that the capabilities of the business were “strong,” but he felt it was more down to a need to improve its execution on the day of presenting.

The measure will also aim to bring data-business Choreograph more into the heart of GroupM, Read told Adweek, in recognition of the increasing demand for data insights by clients as Google’s third-party cookie cull looms in 2024.

“Our industry has to evolve as the market evolves and clients are looking for different services, mostly technology driven although creativity still remains important,” said Read. “We have to have the world’s best creative talent and we have to support experts in areas around data and technology in ecommerce in AI. And those disciplines … are growing in size, and so this will enable us to change our structure to deliver our services most effectively to our client.”

He added that to improve its fortunes in the U.S., GroupM would also continue to modernize its offer through acquisitions as it has within the influencer marketing space, and invest in creative talent and AI while training to develop its people.

New business, the bribery investigation and Ogilvy’s turnaround

Despite the performance of GroupM in North America, he believes that new business was “improving” citing recent account wins with Estée Lauder’s media account in China, Hyatt’s global creative account, Lenovo’s global creative account, Nestlé’s media account for Europe, Unilever’s media account in Australia and New Zealand and Verizon’s creative account for North America.  

Its new business performance by the client sector saw a decline in tech and digital services by 12.7% and in retail by 8.4% during the last three months. However, Telecom, Media and Entertainment were by +8.4%, Financial Services were up by 3.9%, Healthcare and Pharma were up by 1.5%, CPG grew by 14.5%, Automotive was up by 2.1%, Travel and Leisure was up by 4.1%.

We have senior leaders both from within China and outside China who have stepped in to manage it, and we are instructing independent experts to carry out an independent investigation at this point.

Mark Read, CEO of WPP

The total net new business performance was $1.4 billion (1.7 billion pounds) for the third quarter, bringing it to $3.4 billion (4.11 billion pounds) won for the year-to-date.

Meanwhile, following reports of bribery taking place involving an executive from within GroupM’s offices in China, Read revealed that the individual involved had been dismissed while the business had also stopped dealing with third parties who were alleged to have been involved. Two former employees are also reported to have been involved.

“We have senior leaders both from within China and outside China who have stepped in to manage it, and we are instructing independent experts to carry out an independent investigation at this point,” he added.

Commenting on Ogilvy being named as Adweek’s Global Agency of the Year earlier this month, Read praised the new creative energy and talent brought into the business by its Global CEO, Devika Bulchandani while “unleashing a lot of talent” that already worked there.

“I’m really pleased by the progress they have made,” he said. “Ogilvy will grow 3-4% this year. It’s the first time since before Covid that they have done it, and all credit to them for achieving that.”

It was also revealed that WPP is planning to host a Capital Markets Day in January 2024, when it would reveal more of its strategic roadmap over the next three to five years.