Read was speaking at the WPP Investors day, at which he described a “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.”
But according to both Reuters and the Financial Times, this will lead to the loss of 3,500 jobs , offset by 1,000 new hires that will improve the firm’s senior creative leadership in New York agencies. Read said that the company intends to invest up to £300m over the next three years for the restructure, while cutting costs of £275m a year by 2021.
According to reports in the Guardian, around 80 offices could be closed with another 100 offices facing combined operations. WPP’s group of advertising agencies have more than 3,000 offices across 112 countries.
“We need a simpler WPP, we need to invest in the future,” Read told Reuters. “WPP has become too unwieldy, with too much duplication. It is not always as focused or as fleet of foot as it needs to be to satisfy the needs of all our clients around the globe.” Investors heard yesterday that the company would see more mergers and integration at both the company and country levels.
The first indication of the simplification instinct came with the merger of VML and Y&R in September, and followed with the merger of Madison Avenue stalwart, J. Walter Thompson, and digital agency Wunderman in November. At the time, Read had noted the client demand for simplicity and that the merger was designed to “reshape our company around their needs”.
The loss of major clients in the past year has seen the company cutting sales and profit forecasts, as competition from Facebook, Google and various consultancies continues to shake up the industry. However, Read said there was some improvement with sales forecast to decline just 0.5% year-on-year versus the 1% decline that had been envisaged in October.
Speaking to the Guardian, one anonymous analyst said “I think there is relief that WPP’s situation hasn’t got any worse, rather than a genuine belief that this marks the turning point for the company”.
Following the restructure, the newly-logoed WPP will focus on four key strategic areas:
- “Communications focuses on advertising, content, media, public relations and public affairs, and healthcare.”
- “Experience reflects the growing need of clients to create new brand, product and service experiences.”
- “Commerce allows WPP to expand its growing omni-channel commerce business and its work with brands to help them succeed in marketplaces such as Alibaba and Amazon.”
- “Technology underpins WPP’s work with both CMOs and CIOs to build and operate marketing technology that supports their consumer- and customer-facing activities.”
The same Sir Martin has been critical of his former firm’s direction since his departure. In comments reported by Campaign India, Sir Martin said he “was electrocuted by WPP”. He went on to criticise the company’s top management for not travelling to understand what people at the frontline of the company are doing in markets far from headquarters.
Sourced from Reuters, Financial Times, WARC, WPP, Campaign India; additional content by WARC staff