Karen Blackett says WPP will focus on SMEs and alternative remuneration in quest for growth
Karen Blackett, WPP UK’s newly appointed country manager, is earmarking the ad budgets of small and medium-sized businesses, as well as experiments with alternative remuneration models, to deliver growth for the holding group at a time when concern lingers over a wider slowdown of the ad market.
Speaking to The Drum, Blackett said the insight she’s garnered from three years in an advisory role with the Department for International Trade is informing her strategy for the group, believing that overlooked SMEs will prove to be a key growth market.
Blackett was named WPP's UK country manager in January
“The growth of the UK economy is coming from SMEs,” she told The Drum, clarifying these businesses as those valued at £2m-£15m.
Margins will be the biggest barrier to creating work and forming a lasting relationship with what Blackett refers to as “new economy” businesses. Her solution to this is to reassess WPP’s remuneration models.
“We’re in the business of growth, and our remuneration should be about that growth,” she said. “There’s a different way of working which isn’t about time. It’s about outcome and growth.”
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Alternative remuneration models aren’t new (Airbnb was paying TBWA on a “per night” basis back in 2015) but it’s a challenging model to make work for both sides, especially in the context of a large, global network working with small, local brands.
Dealing with what she refers to as these “new economy” companies will not only require revamped business proposals but a shift in agencies’ ways of working. This attitudinal change is also necessary against the backdrop of a tumultuous media landscape, one that saw $10bn worth of media business put under review in January alone.
Closer to home WPP has experienced a difficult year. Pivotal downgraded the firm's investment rating from buy to hold just three days ago, citing the pains experienced by much of the industry: "slow growth for core clients and the application of zero-based budgeting tactics, the ongoing impact on fees from enhanced scrutiny of contracts ... threats of wider-scale in-housing of programmatic buying and creative content production, slowing shifts of spending into digital media ... and competitive threats from consulting firms".
Blackett was hired by Sir Martin Sorrell to get WPP working “in a more joined-up and collaborative way” – no doubt to condition the business ahead of an impending fight with new agency models. Six weeks into her job, she’s been left unfazed by the agency-guzzling management consultancies that were dominating conversations a year ago (“when we have come up against them [at pitch], certain parts of the group are winning each time”) but has uncovered internal concern over WPP’s plans for “horizontality”.
Essentially it’s a way to get more agencies working together more often, “but the biggest thing that comes up … is P&L,” she said.
“How do we make [horizontally] work in terms of the commerciality? People have a fear that it’s going to affect their P&L when we join together, and that leads to an attitude of being protective. It’s a commercial issue that we need to resolve.”
Blackett compares inter-network collaboration to the football industry. The agencies of WPP and the clubs and holding company is the national squad; employees are expected by their country manager to “play for your national side as passionately as you play for your club”.
“The next day you can go back to being competitive with each other,” she explained, “but when I’m calling you up, you’ve got to be on that national team.”
To bolster WPP comradery, Blackett is working with chief transformation officer Lindsay Pattinson on networking and connection initiatives. On example of this is a secondment-style scheme that allows senior management to work at and learn for another agency for three or six months is on the cards.
And of course, increasing company diversity is still at the top of Blackett’s priorities. One of her objectives set by Sorrell was to make sure the “very best” people are working for WPP, to which she retorted: “And by that you mean more diverse people, don’t you Martin?”
“If we want to have the best people working here, we need more diverse people,” she said. “That means we need to start fishing in different ponds – not always recruiting form the same organisations and fields.”