Cline Dion released the Titanic theme song My Heart Will Go On last time WPP’s stock level was this low. New CEO Cindy Rose has promised that WPP will not just go on, but will double down on tech, competitive pricing and cost efficiencies to stop the large advertising tanker from sinking further.
Dion told investors and journalists the advertising holding company’s performance is “unacceptable” amid a second profit warning after worse-than-expected Q3 results. September quarterly revenue was down 8.4 per cent year on year (3.5 per cent on a like for like basis), and it now expects an annual revenue decline of between 5.5 per cent and 6 per cent. This has caused a frenzy on the stock market. WPP’s share price slumped nearly 16 per cent to £296.30 — it’s lowest level since 1998.
WPP has lost a number of large accounts overseas in the past year, including the North American Coca-Cola business and Mars globally. The group has also cited cost pressures from consumer packaged goods, automotive and government clients as another cause for the poor performance.
It’s important to caveat that while global results have been poor, WPP’s Australian business has been performing strongly in this market with Mindshare and EssenceMediacom scoring strongly in B&T’s Agency Scorecards.
Rose, who took the helm of WPP as its CEO in September, addressed investors and journalists for the first time since taking the reins from Mark Read. She said that WPP will sharpen its focus on data, AI and competitive pricing to turn around a business that “is certainly not where it needs to be”.
“My ambition for WPP is sky-high, and we are committed to doing the hard work it will take to turn this business around. I acknowledge that our recent performance is unacceptable and we are taking action to address this,” Rose said.
“To deliver performance improvements, we will position our offering to be much simpler, more integrated, powered by data and AI, efficiently priced, and designed to deliver growth and business outcomes for our clients. We will significantly improve our execution, strengthening our go-to-market and dramatically simplifying how we organise ourselves internally, as well as building a high-performance team culture.
“We will expand our addressable market by pushing harder into enterprise and technology solutions. And finally, we will take a disciplined approach to capital allocation with a focus on cost efficiency and maintaining a strong balance sheet while prioritising the parts of our business where we can deliver the greatest shareholder value.”
Rose said WPP will also focus on cost efficiency, client acquisition and retention, strengthening the holdco’s go-to-market strategy, and “building a high-performance team culture”.
“We have strong foundations and the ingredients needed to succeed. We have amazing long-standing clients that represent the largest, most well-known brands in the world, strong capabilities and world-class talent that spans media, production, and creative, some of the most consequential agency brands in the market, unrivalled global scale and reach, and market-leading technology and technology partnerships that give us a real competitive edge. This is an exciting platform to build on,” she said.
“There is a lot to do, and it will take time to see the impact, but in my first 60 days, we are already moving at pace with some initiatives already announced and more to come. We know what it takes to win: we are optimistic, energised, and confident that we’re building the right plan and the right culture to secure a bright future for WPP, our people, our clients, and our shareholders. We look forward to sharing more details early in the new year.”
Rose will be hoping that clients will be Gettin’ Jiggy Wit It —another ’98 classic—when her recovery plan takes hold.
