Mark Read's Investor Meet: Streamlining, no playing catch-up with tech giants in focus
He said that Lindsay Pattison, chief transformation officer, is working on how WPP services its large clients and stop silos from getting in the way
WPP released its half-yearly results on September 4. Newly appointed CEO Mark Read head on tackled the questions raised about WPP over the last five months in his first investor meeting. “People said, can WPP return to growth, can WPP win new business? We have demonstrated that the business can return back to growth, and we have won new businesses. We won six of the major pitches we have done since that time. Where we were the incumbent agency, we won three out of the four pitches,” he said.
As part of the presentation, Read gave a glimpse into the future of WPP. “I am optimistic about the future of our industry and for the future of WPP,” he said. He said that the common complaint he hears from clients is that “we are not moving quickly enough and that we are too complex to get access to, we have assets and capabilities in the group that they (clients) don’t know about.” Proposing a solution to this problem, Read said that WPP will “liberate the skills, talents and resources inside the group and focus them on clients.”
Structure and Strategy
He said that WPP will look at the non-performing parts of the business in North America and restructure the business by the end of the year. “We need to make sure that we have discipline in terms of how we add to the group and how we build our balance sheet, so that sort of sums up to a strategy review by year end. We’ll come back to it before the end of the year and look at the actions we’re taking to return the business to better position for growth and to address the non-performing parts of our business, primarily in North America, in the creative agencies within the data investment management part of the Company as well as any restructuring costs that maybe needed in the associated benefits with them,” he said.
He said that in places where clients are focused operative agencies, “you need to have stronger creative agencies to challenge that because we have stronger businesses with better work, better strategy, better reputations, in short, those companies have the capabilities that they need to grow.” Speaking about disruption due to technology, he said, “Data investment management particularly in the United States has been challenged. Work has been disrupted by different ways of getting to the same answer, using technology. And in North America I think is where the sort of the intersection of those two trends is most pronounced."
On the speculation about the sale of research arm Kantar, Read said that "no decision has been made" so far and "we'll update you at the right time."
Shifting Debate from In-housing to On-Site
Read said that historically agencies have been reluctant to let people work outside of operations. Consultancies on the other hand have been more familiar to do that. “I’d like to thank any of our clients who are looking to sort of outsource and the consultants who bring them in house; they should have a conversation with us. And I think we can very effectively develop solutions with them, I think it’s an opportunity for us if we do it correctly,” he said.
Vision for Co-locations
Simplifying the structure of the organisation is one of the key areas that Read will focus on as he dons the hat of CEO. He said that Lindsay Pattison, chief transformation officer, is working on how WPP services its large clients and stop silos from getting in the way. “We have too many companies and brands. We need to think about how we streamline it.” He cited the example of the merger of Burson-Marsteller and Cohn & Wolfe to create Burson Cohn & Wolfe (BCW) and said, “We are seeing no degradation in revenue, if anything the revenues of the two businesses together are doing better.” He also said breaking down the silos has reduced some operating costs.
He said he will not be keen on merging agencies, as suggested by Forrester. “We need to have enough brands to manage client conflict but not so many that it makes the business impenetrable to understand,” he said.
The country managers, like CVL Srinivas in India, will play a greater role in “bringing together our operations in countries,” Read said. “We cannot underestimate the power of co-location,” he said. He said that over the next two years about 40,000 of the 1,31,000 WPP employees will be in co-locations.
WPP will not compete with Technology Giants
He said that WPP needs to help clients manage data and not necessarily own that data. On technology he said WPP will not compete with Google, Adobe, or Microsoft, by developing technology but instead integrate that technology. He said that what clients are looking for is “how we embed data much more deeply in our offer, and that doesn’t mean buying technology or developing technology; increasingly it means integrating other people's technology leveraging the investment that the others are making between them. Google, Adobe, Microsoft, IBM, Salesforce, Oracle to name a few are probably spending $10 billion on advertising and marketing technology and we can't compete with them,” he said.
Competing with Consultancies
He noted that WPP is competing with consulting businesses in fast-growing segments. “We do think we are competing with the consulting businesses,” he said. Read said that this competition is not in the creative aspect of the business, where WPP has an edge over consulting companies. “WPP can punch above its weight in terms of competing with consulting companies. But we are not in denial that that is happening.”
Read said that technology giants such as Alibaba, Amazon, Google, Tencent and Facebook are all competing with WPP for talent, attention and by going directly to clients. “But I do think that there is a role for WPP in that mix. We spend $ 5bn per year with Google and $ 2.5 bn with Facebook; we just need to have a constructive relationship with them.” He said this includes pointing out when these platforms are doing badly, and noted that WPP has never shied away from doing that. “We have held them to high standards in terms of viewability, adjacency to content, and other areas that clients find valuable.”
On Talent
Observing that all stakeholders agree that there is need for change, Read said that there is a need for “radical evolution” of the industry. “We need to make WPP the destination for the millennial talent that is also going to Google and Facebook and should come to WPP. If we look at the parts of the business that are not performing as well as we’d like them to, talent is in many cases at the heart of it. So, we need to refresh and rejuvenate our talent.”
As part of the presentation, Read gave a glimpse into the future of WPP. “I am optimistic about the future of our industry and for the future of WPP,” he said. He said that the common complaint he hears from clients is that “we are not moving quickly enough and that we are too complex to get access to, we have assets and capabilities in the group that they (clients) don’t know about.” Proposing a solution to this problem, Read said that WPP will “liberate the skills, talents and resources inside the group and focus them on clients.”
Structure and Strategy
He said that WPP will look at the non-performing parts of the business in North America and restructure the business by the end of the year. “We need to make sure that we have discipline in terms of how we add to the group and how we build our balance sheet, so that sort of sums up to a strategy review by year end. We’ll come back to it before the end of the year and look at the actions we’re taking to return the business to better position for growth and to address the non-performing parts of our business, primarily in North America, in the creative agencies within the data investment management part of the Company as well as any restructuring costs that maybe needed in the associated benefits with them,” he said.
He said that in places where clients are focused operative agencies, “you need to have stronger creative agencies to challenge that because we have stronger businesses with better work, better strategy, better reputations, in short, those companies have the capabilities that they need to grow.” Speaking about disruption due to technology, he said, “Data investment management particularly in the United States has been challenged. Work has been disrupted by different ways of getting to the same answer, using technology. And in North America I think is where the sort of the intersection of those two trends is most pronounced."
On the speculation about the sale of research arm Kantar, Read said that "no decision has been made" so far and "we'll update you at the right time."
Shifting Debate from In-housing to On-Site
Read said that historically agencies have been reluctant to let people work outside of operations. Consultancies on the other hand have been more familiar to do that. “I’d like to thank any of our clients who are looking to sort of outsource and the consultants who bring them in house; they should have a conversation with us. And I think we can very effectively develop solutions with them, I think it’s an opportunity for us if we do it correctly,” he said.
Vision for Co-locations
Simplifying the structure of the organisation is one of the key areas that Read will focus on as he dons the hat of CEO. He said that Lindsay Pattison, chief transformation officer, is working on how WPP services its large clients and stop silos from getting in the way. “We have too many companies and brands. We need to think about how we streamline it.” He cited the example of the merger of Burson-Marsteller and Cohn & Wolfe to create Burson Cohn & Wolfe (BCW) and said, “We are seeing no degradation in revenue, if anything the revenues of the two businesses together are doing better.” He also said breaking down the silos has reduced some operating costs.
He said he will not be keen on merging agencies, as suggested by Forrester. “We need to have enough brands to manage client conflict but not so many that it makes the business impenetrable to understand,” he said.
The country managers, like CVL Srinivas in India, will play a greater role in “bringing together our operations in countries,” Read said. “We cannot underestimate the power of co-location,” he said. He said that over the next two years about 40,000 of the 1,31,000 WPP employees will be in co-locations.
WPP will not compete with Technology Giants
He said that WPP needs to help clients manage data and not necessarily own that data. On technology he said WPP will not compete with Google, Adobe, or Microsoft, by developing technology but instead integrate that technology. He said that what clients are looking for is “how we embed data much more deeply in our offer, and that doesn’t mean buying technology or developing technology; increasingly it means integrating other people's technology leveraging the investment that the others are making between them. Google, Adobe, Microsoft, IBM, Salesforce, Oracle to name a few are probably spending $10 billion on advertising and marketing technology and we can't compete with them,” he said.
Competing with Consultancies
He noted that WPP is competing with consulting businesses in fast-growing segments. “We do think we are competing with the consulting businesses,” he said. Read said that this competition is not in the creative aspect of the business, where WPP has an edge over consulting companies. “WPP can punch above its weight in terms of competing with consulting companies. But we are not in denial that that is happening.”
Read said that technology giants such as Alibaba, Amazon, Google, Tencent and Facebook are all competing with WPP for talent, attention and by going directly to clients. “But I do think that there is a role for WPP in that mix. We spend $ 5bn per year with Google and $ 2.5 bn with Facebook; we just need to have a constructive relationship with them.” He said this includes pointing out when these platforms are doing badly, and noted that WPP has never shied away from doing that. “We have held them to high standards in terms of viewability, adjacency to content, and other areas that clients find valuable.”
On Talent
Observing that all stakeholders agree that there is need for change, Read said that there is a need for “radical evolution” of the industry. “We need to make WPP the destination for the millennial talent that is also going to Google and Facebook and should come to WPP. If we look at the parts of the business that are not performing as well as we’d like them to, talent is in many cases at the heart of it. So, we need to refresh and rejuvenate our talent.”
