Skip to main content

Mark Read started at WPP in 1989 as Martin Sorrell was building the small company into what became the world’s largest advertising firm.

Three decades later, Mr. Read has taken the helm of WPP after Mr. Sorrell, who had become the ad world’s biggest name, departed in the spring during a personal-misconduct scandal. The London-born Mr. Read inherits a sprawling and struggling empire and faces the challenge of paring down the company, in part undoing what Mr. Sorrell built, as old-school conglomerates such as WPP and rivals Omnicom Group Inc. and Publicis Groupe fend off incursions from competitors.

The new players, Google and Facebook Inc., and now Amazon.com Inc., have massive scale and are trying to cut out the long-standing intermediaries such as WPP, with its advertising agencies, media buyers and array of services. Meanwhile, major advertisers such as Procter & Gamble Inc. have questioned the value they’re getting from the likes of WPP and are looking at new ways of doing things. It’s a two-front attack that WPP is losing.

Story continues below advertisement

Mr. Read has made “structural change, not structural decline” a refrain for his strategy to rally WPP – but he is warning investors of the pressure WPP is under.

“Amazon, Facebook, Google and Tencent, and Alibaba are competing for talent, competing for attention from clients – seeking more direct relationships – and disrupting our market,” Mr. Read said last week on his second day as CEO, as WPP issued another weak quarter of earnings. The WPP stock took another blow and the shares are now down about 40 per cent from an all-time high in early 2017.

Google and Facebook controlled an estimated one-quarter of all global ad spending in 2017, up from one-10th in 2012. While the tech giants compete directly for ad dollars, a lot of money that goes to Google and Facebook comes from clients that still run their business through WPP. Mr. Sorrell a decade ago first called Google a “frenemy” of the established advertising world.

The WPP story, until recently, was one of consistent growth, alongside constant deal-making. Mr. Sorrell in the late 1970s and early 1980s was chief financial officer of London ad agency Saatchi & Saatchi and led expansion of the firm through takeovers. In the mid-1980s, he struck out on his own with WPP, a maker of wire baskets. Mr. Sorrell soon forged his name in two big-money hostile takeovers on New York’s Madison Avenue, J. Walter Thompson and Ogilvy. The New York Times billed it as a London invasion of the American ad business and called Mr. Sorrell “a financial wizard who has never written a headline, drawn a storyboard or devised a media plan.”

The WPP advertising, marketing and public relations conglomerate has more than 400 companies, employing 130,000 people, in 112 countries. But cracks emerged several years ago, as the move to digital ads from venues such as television and print intensified, and 2017 marked the first year that WPP’s benchmark measure of sales fell outside of a recession. This year, WPP sales are up less than 1 per cent, and in North America, they are down 3 per cent.

“A lot of people have jumped to the conclusion that something is structurally awry,” said analyst Tom Singlehurst of Citi in London.

Mr. Read’s key problems are where Mr. Sorrell set the pillars of WPP, in the United States, and it remains the heart of WPP’s business. American economic growth is strong but WPP’s operations are stuck in decline.

Story continues below advertisement

A worry for WPP is Ford Motor Co., which in the spring put its decades of doing business with WPP under review. A final decision has not yet been made, but Ford has already taken a step elsewhere, for a campaign this fall. Ford hired Wieden & Kennedy, an independent agency in Portland, Ore., best known for its work for Nike, including recent ads featuring former NFL quarterback Colin Kaepernick.

It’s an example of brands rethinking how they have always done their marketing.

Another trend, said David Soberman, a marketing professor at the University of Toronto, is brands leaning toward smaller specialist firms with a digital focus and cheaper services, rather than an expensive conglomerate such as WPP.

“That’s happening quite a lot, to the detriment of the big agencies,” Prof. Soberman said. “The big agencies specialize in traditional media.”

Mr. Read, 51, is not a Don Draper from the past century. While he has been at WPP most of his career, his work has been defined by digital, from founding an online startup in 1999 when he was away from WPP, to his long tenure overseeing WPP’s digital moves. In 2015, he took the helm of WPP’s Wunderman, a digital agency, and retooled and revived the firm. Part of it included folding in other parts of WPP.

WPP has also made moves that reflect Mr. Read’s strategy of paring back the sprawl. WPP in Toronto – which includes Taxi in advertising – comprises 19 locations downtown and employs more than 2,000. In July, WPP said it plans to bring it all together as the main tenant at the new Waterfront Innovation Centre that Menkes Development Ltd. is building.

Story continues below advertisement

“It will make it easier for our people to work together and give clients what they want,” Mr. Read said in July.

WPP directs about US$75-billion of ad money each year. Among its clients are three-quarters of the Fortune Global 500 and all of the Dow Jones 30. Those clients want it to be simpler, and cheaper, to work with WPP. It’s another hurdle, said Alan Middleton, a marketing professor at York University who worked for WPP in its early days. WPP is not a monolith but many silos, cousins who don’t see themselves as family.

“Ogilvy people think of themselves as Ogilvy,” Prof. Middleton said. “They don’t think of themselves as WPP.”

Tom Doctoroff, chief cultural insights officer at the brand and marketing consultancy Prophet, spent a quarter-century at WPP and was a long-time executive in Asia at J. Walter Thompson until 2016. He said Mr. Read has to win back the confidence of investors.

Mr. Doctoroff believes the conglomerate model will live on, because major brands need an array of services that deliver a unified voice.

“I don’t see how you can do it,” Mr. Doctoroff said, “with a million independent shops.”

Story continues below advertisement

The WPP empire

Advertising remains the core of a conglomerate

that includes more than 400 firms and some

130,000 people.

Category

Half year until

June 30

Per cent

of total

revenues

% chng. WPP

benchmark

revenues

Advertising,

investment

media mgmt.

42.9%

-0.8%

Data investment

management

15.5%

-1.5%

Public relations and

public affairs

9%

-3.5%

Brand consulting,

health and wellness

and specialist

communications

32.7%

-1.9%

THE GLOBE AND MAIL, SOURCE: WPP

The WPP empire

Advertising remains the core of a conglomerate that

includes more than 400 firms and some 130,000 people.

Category

Half year until

June 30

Per cent of

total revenues

% chng. WPP

benchmark

revenues

Advertising,

investment

media mgmt.

42.9%

-0.8%

Data investment

management

15.5%

-1.5%

Public relations and

public affairs

9%

-3.5%

Brand consulting,

health and wellness

and specialist

communications

32.7%

-1.9%

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: WPP

The WPP empire

Advertising remains the core of a conglomerate that includes

more than 400 firms and some 130,000 people.

Category

Half year until June 30

Per cent of

total revenues

% chng. WPP’s

benchmark

revenues

Advertising, investment

media management

42.9%

-0.8%

Data investment

management

15.5%

-1.5%

Public relations and

public affairs

9%

-3.5%

Brand consulting, health

and wellness and specialist

communications

32.7%

-1.9%

JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: wpp

Report an error Editorial code of conduct
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter