WPP to cut staff and offices as part of restructuring

The holding company's three-year plan involves further simplifying its operations and investing more in creativity.
drew-beamer-692664-unsplash

Holding company WPP has revealed details of a restructuring plan it says will be a “radical evolution” in simplifying its structure and returning it to growth after numerous under-performing quarters.

In a release issued ahead of an investors call Tuesday morning, the largest advertising holding company in the world announced the three-year restructuring plan would cost £300 million, resulting in an estimated £275 million in annual savings by 2021.

As part of the restructuring, the company plans to cut 3,500 jobs from its global workforce, which currently numbers roughly 134,000. However, it also plans to make roughly 1,000 new creative hires as part of “a renewed commitment to creativity” and invest £15 million annually to develop “creative leadership.” The company has not said where the job cuts would come from, but did say that North America – a region WPP has consistently under-performed in, according to recent financial reports – would be a particular focus for its creative reinvestment.

Focusing on creativity is a major theme of the restructuring – with WPP calling it the “most important competitive advantage” it had – though it also stated that investing in creativity would happen alongside an acceleration in its tech and data capabilities.

“What we hear from clients is very consistent: they want our creativity, and they want us to help them transform their business in a world reshaped by technology. This is at the heart of what we do,” said WPP CEO 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. This more contemporary proposition has already helped us to win new business, including Volkswagen’s creative account in North America.”

The restructuring will also include the shutting of roughly 80 offices globally, and combining the operations of a further 100 locations. The release mentioned further development of “campus co-locations.” In July, WPP announced it would be the anchor tenant in Toronto’s Waterfront Innovation Centre, housing all of its operations and roughly 2,000 staff in cities within a 260,000 sq. ft. space, beginning in late 2021.

Since taking over from Sir Martin Sorrell in April, Read has been working to simplify the massive holding company’s operations to become more agile, most notably by merging VML and Y&R to create VMLY&R in September, followed by the merger of J. Walter Thomspon and Wunderman last month.

The company has also yet to say which agencies would be affected by the office closures and consolidation. Read did tell Campaign, however, that while WPP is examining its portfolio of agencies, there are no more planned mergers on the scale of VMLY&R or Wunderman Thompson. WPP has also received proposals to acquire data investment management agency Kantar; the company said in today’s statement that it would be working with a potential strategic or financial partner to “further develop” Kantar, while retaining a minority stake and strategic links.

In its Q3 results, WPP’s reported revenue was down 0.8% to £3.76 billion, with a like-for-like net sales decline of 1.5%, falling short of expectations and sending shares to their lowest level since 2012 when the results were released in October.

WPP companies in Canada include Ogilvy, Taxi, John St., Tank, The&Partnership, Geometry, Mirum, Grey, Group M, Mediacom, Wavemaker, Mindshare, Hill + Knowlton and – beginning in January – the newly merged Wunderman Thompson.

Tags:


,