WPP announces huge restructuring plans
WPP have announced a 300 million pound (US$375 million) restructuring plan over the next three years following the exit of founder and former chief executive Sir Martin Sorrell earlier this year.
Once the world's most valuable ad network, WPP said it will be cutting 3,500 of its 134,000 workforce globally, and combined efforts would ultimately save 275 million pounds a year by the end of 2021. Half of the savings will be reinvested in businesses over the next three years, according to a release Tuesday.
“The restructuring of our business will enable increased investment in creativity, technology and talent and this investment will drive sustainable, profitable growth for shareholders," commented Chief Executive Officer Mark Read.
“We are fundamentally repositioning WPP as a creative transformation company with a simpler offer that allows us to meet the present and future needs of clients," he added.
Additional actions to position the company for growth and to streamline operation include the closure of unsustainable operations, disposal of under-performing businesses, re-location to newly integrated office spaces and establishment of a consistent shared service infrastructure.
Sir Martin Sorrell's abrupt exit from the advertising empire earlier this year has triggered concerns about how his successors will lead through a period of radical change for the advertising industry.
The company is spending an additional US$18.7 million a year in tech assets and creative talent in the next three years, with particular focus on US markets, as the advertising agency is strengthening its foothold at a time when the industry is undergoing a fundamental shift towards the integration of data and consumer insights.
It is also seeking strategic or financial partners for its consumer data consultancy Kantar, with WPP retaining a significant minority interest and strategic links, adding it has already received various unsolicited expressions of interest.
WPP’s future offer will cover four sectors: communications, brand building and service experience, commerce, and technology.
Its media investment arm GroupM has slightly downgraded its growth forecast for the global advertising market to 3.6 percent in 2019, from the previous 3.9 percent, citing an overall sluggish macroeconomic situation and potential repercussions brought by the global trade tensions.
Its initial restructuring efforts include the integration of VML and Y&R, and Wunderman and J. Walter Thompson, announced earlier this year.
Currently it has about 400 ad business entities in more than 3,000 offices in 112 countries. WPP shares edged up more than two percent on Tuesday following the restructuring announcements.