WPP to invest $317 million in data and tech to support AI strategy in 2024
The group said it plans to focus on leveraging AI opportunities, maximising creative transformation, expediting growth and improving cash generation
Advertising conglomerate WPP has announced its intentions to go bullish on AI, but added that 2024 will be a tough year. The group announced the "next phase of its strategy" to leverage AI opportunities, maximise creative transformation, expedite growth and improve cash generation.
The group announced that it intends to achieve these targets primarily through AI, by unlocking the full potential of creative transformation to drive growth, building world-class, market-leading brands and executing efficiently to drive strong financial returns.
The group further said that it intends to to lead in AI with its acquisition of Satalia in 2021; organic investment in AI, client technology and data; and deep partnerships with Adobe, Google, IBM, Microsoft, Nvidia and OpenAI.
Six powerful agency networks – AKQA, Ogilvy, VML, Hogarth, GroupM and Burson – which now represent close to 90% of WPP’s revenue less pass-through costs will be at the forefront of the organisation's efforts to build market-leading brands as outlined in its goals.
Its updated medium-term targets include 3%+ LFL growth in revenue less pass-through costs; 16-17% headline operating profit margin, and adjusted operating cash flow conversion of 85%+.
The organisation said that it sees a growth of 0-1% in 2024 with 20-40 bps margin improvement.
Previous medium-term targets, outlined at WPP’s Capital Markets Day in December 2020, were for 3-4% growth in revenue-less pass-through costs including an M&A benefit of 0.5-1.0% annually; with a headline operating profit margin of 15.5-16.0%.
Mark Read, CEO of WPP, said: “The past three years have demonstrated the power of brands, creativity and investment in marketing to drive growth for clients and to build significant value. Research demonstrates that those companies with the strongest brands deliver the highest returns to shareholders.
“AI is transforming our industry and we see it as an opportunity not a threat. We firmly believe that AI will enhance, not replace, human creativity. We are already empowering our people with AI-based tools to augment their skills, produce work more efficiently and improve media performance, all of which will increase the effectiveness of our work. We also see opportunities to sell new AI-driven products and services to our clients and to capture more growth in areas like production.
“Our long-standing investments in AI, including our AI-powered platform, WPP Open, and our acquisition in 2021 of Satalia, a leading UK AI company, are at the heart of our competitive offer. An ongoing annual investment of £250m ($317 million) in data and technology to support our AI strategy is included in our 2024 financial plans.
“While we had to navigate a more challenging environment in 2023, we see strong future demand for our services and are confident we can accelerate our growth over the medium-term.
“Today, the team and I look forward to demonstrating our commitment to leadership through innovation and sharing our plans for improved and sustained returns for our people, our clients, our communities and our shareholders.”
