WPP's new era got underway publicly today as Mark Read faced investors for the first time as chief executive.
Catch up on The Drum's live updates from the meeting below.
Good morning. A day after being named WPP's new chief executive, Mark Read's first public order of business is to present its latest financial results to investors in London. There are encouraging signs for the world's largest marcomms group as it reports Q2 net sales up 0.7% – its first growth since Q1 of 2017. But investors will be keen to hear Read's vision for a behemoth business which some analysts say needs to be radically simplified. How much we find out today remains to be seen but we'll be bringing you all the updates here from 9.30am UK time.
Mark Read gets us underway by saying WPP has started to answer the questions it was facing at its last trading update in April. "Can WPP return to growth? Can WPP win new business? We’ve demonstrated the business can return to growth. We've won 6 of the 8 major pitches we’ve done. Won 3 out of 4 where we were incumbent."
Read promises he'll give us a "taste" of his new strategy for WPP today before throwing over to finance chief Paul Richardson to take us through the numbers.
Here's how Richardson is framing WPP's financial performance for the first half of the year
One thing the analysts present will surely be asking Read today is how WPP intends to remedy its sluggish performance in North America, where like-for-like sales were down 3.3% for the three months to June 30. Finance chief Richardson admits WPP's advertising, direct, digital & interactive, data investment management and brand consulting businesses have found it "challenging" in the US.
Here's WPP's revenue per sector for the group as a whole
Richardson points to WPP's "healthy" run of new business wins this year. Here are the trade estimates of what those accounts are worth.
Richardson reveals what WPP made from some of its major business "disposals" including Globant and AppNexus
Richardson finishes with WPP's outlook for the remainder of the year
Back to Mark Read now. He says this is his “second day on the job but not really because I’ve been here for a number of years” and been effectively running the business with Andrew Scott since April.
Read promises a strategy of "radical evolution". He says: "I don’t think our industry is one where overnight you go from A to B."
Read: "We need to make WPP a destination for the best talent. If we look at the parts of the business that are not performing as well as we would like to… talent is at the heart of it. We need to refresh our talent."
Read talks of making WPP a destination for "the millennial talent that is going to Google and Facebook but should come to WPP".
Read now talking about WPP's plan for growth
Apparently responding to the recent Forrester report saying WPP should "dissolve" many of its agency brands, Read says: "We have too many companies and brands. We need to think about how to streamline it." Stops short of promising full-scale consolidation, however. "We still need to have healthy vibrant brands within our business."
Read reiterates "we don't think it makes sense to break up WPP" but says it is looking at the "shape of its portfolio".
Acquisitions, a major feature of predecessor Sir Martin Sorrell's reign at WPP, are going to remain part of Read's strategy "but we need to be laser focused", he says. He wants to avoid deals that "make WPP more complicated". Targets will be marketing technology businesses that can be "embedded" within WPP's existing networks rather than "making the business sprawl"
This chart shows how WPP's acquisition pipeline has slowed down while it has been shedding some of its companies
Read, summing up, singles out WPP's creative agencies. "They are the part of our business that is most under pressure as clients shift their budgets away from the traditional towards the new. We need to have stronger creative agencies with stronger reputations that do better work and win share."
Read now inviting questions from analysts and investors, which should be lively. We'll bring you the highlights.
At this juncture it's worth noting that WPP's share price is down 6.31% this morning. Welcome to the job, Mr Read.
One analyst asks about the ongoing Ford review (it is one of WPP's biggest accounts) and the news that the car maker has appointed rival Wieden+Kennedy to create its autumn campaign. "Review is ongoing," says Read. "No decision has been made. We continue to work with Ford. By the way, we’ll be heavily involved [in the W&K campaign]. It’s a brand campaign but we’re heavily involved in helping Ford implement it."
Read is asked about his comments on WPP's creative agencies needing to improve and the "deterioration" of the business in North America, two challenges that are interlinked. He responds: "It’s about management, leadership, creative resource, reputation, repositioning the offer. It’s not something that’s going to get solved overnight but we know what we need to do."
Read also said earlier that he had spent "most of the summer" in the US to get a handle on the challenges there.
We're back on consolidation and mergers. Read points to an obvious reason why WPP wouldn't want to follow Forrester's advice and merge most of its agencies – it would have to resign clients. "We need to have enough brands to manage client conflict but not so many that it makes the business impenetrable to understand. Sometimes I think we’re talking to ourselves, not talking to our clients. I sit in meetings where people say they’re representing five different agencies and clients don’t care."
Asked about the prospects for research arm Kantar, which has been heavily linked with a sale, Read starts extolling the virtues of Wunderman's data division. Make of that what you will. Read will only say "no decision has been made" on Kantar and "we'll update you at the right time".
The Q&A concludes. So what did we learn about Read’s plans for WPP? While he’s saving the juiciest stuff for his strategy reveal at the end of the year, there were some strong hints about his strategy for the group and some less than effusive comments towards its creative agencies. Here’s a recap:
- Read won’t “dissolve” WPP’s hundreds of agency brands as Forrester recommended (it needs them to avoid client conflicts) but will “streamline” the group’s offering. “We have too many companies and brands,” he admitted.
- Acquisitions will remain part of its strategy but the priority will be on marketing technology businesses that can be embedded into its existing networks rather than adding to WPP’s “sprawl”.
- Read is demanding improvement from WPP’s creative agencies, which are especially under pressure in North America. “We need to have stronger creative agencies with stronger reputations that do better work and win share,” he said.
- He’s giving the US particular attention after another disappointing financial performance for the region. “It’s about management, leadership, creative resource, reputation, repositioning the offer.”
- Read wants to make WPP more desirable to “millennial” talent which he feels it is losing out on to Google and Facebook.
- A Kantar sale is almost certainly in play and more "disposals" are inevitable.
That’s all for us today. If you’re not all Mark Read-ed out by now, you can find much more coverage on thedrum.com. Thanks for joining us.