WPP on ‘solidifying the fences’ post-cyber attack

WPP suffered a widespread cyber attack in June which ground several of its businesses to a halt

WPP has said that it understands the "weaknesses" in its system much better post-cyber attack, and is working with suppliers to "solidify the fences" in the near term in order to stave-off future disruption.

Addressing a room of investors, chief executive Sir Martin Sorrell said this morning (23 August) the cyber attack suffered by the group towards the end of June had "no significant" impact on its revenue. The holding group said the attack could not be blamed for the weak performance it posted in Q2, despite causing “significant disruption” at some agencies including GroupM and the Y&R Group.

However, it did say that it had learnt a lot about its IT system in the months following the hack, and that major efforts both internally and by its suppliers – particularly IBM – means it now has a “much better understanding of what needs to be achieved" in order to "solidify the fences”, according to WPP group finance director Paul Richardson.

“It also means we have to accelerate some of the IT transition work which will give us more efficiency,” he said on the company's earnings call, adding that at least 77% of WPP’s IT spend is on client-facing and digital products.

The comments come in the wake of a new study compiled by the Department for Digital, Culture, Media & Sport which found two-thirds of bosses at Britain’s largest firms have had no training in how to handle cyber attacks, despite a number of high profile hacks this year underlining the pressing need for more sophisticated systems.

Speaking on the incoming GDPR regulations, which many companies are still unprepared for, Adam Smith, futures director at GroupM, said WPP is "ready for it".

"The focus when I speak to our people is very much on either anonymised data which will be compliant, or data which is consensual. That is the strategic approach, we are ready for it," he said.

"It is a big task, it is really about tracking and making sure you know where your data comes from both externally and internally to come up with your technical product."

Meanwhile, Sorrell spoke of the irony of the UK being WPP's strongest performing market in the early part of the year – despite looming question marks ahead of Brexit – while many of its new business wins during the period having been in Western Europe.

"It might be something at a micro level to do with our business - we have a strong business in the UK, strong market share," he suggested.

"The other reason may be that there is significant uncertainty and fixed investment is under pressure and therefore variable investment - which is marketing - is more attractive," he added, but qualified this with: "I have no particular evidence to support it."

Sorrell also said the holding group is investing more time and attention in France, Germany, Italy and Spain "because we don’t want to lose influence" when the UK leaves the EU in March 2019.

Speaking more widely on the half year results, Sorrell said the group is now at a stage where it has won enough business to counterbalance the loss of high profile accounts including AT&T and Volkswagen last year.

"When activists or potential acquirers are knocking on doors, in an attempt to fend them off companies will often do things that are good in the short term but not good in the long term," he said. "We are trying to wrestle with why what looked like a fairly manageable period of time between 2010 to 2016 has changed, why our forecasts which we thought were quite reasonable look so wobbly in Q2."

Speaking on reports that the creative pitches have "dried up" and that the remainder of the year will bring another wave of media reviews, he said the level of pitch activity for creative accounts is probably a little less than before, while pitch activity for media planning and buying continues at the same rate.

"I wouldn't agree on the media side it is particularly different. It has been there at that level for a considerable period of time," he said.

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Jessica Goodfellow

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