The Drum 2018 Review: WPP, the story so far

WPP: the story so far

If ever there’s been a fevered pitch around news, leaks and gossip in adland, nothing would quite match the frenzy in recent history that the world’s largest advertising group, WPP, caused this year. Of course, WPP has been attempting to move on from the sudden departure of Sir Martin Sorrell and his legacy, but deteriorating margins and a slowdown in performance of its agencies means that WPP will remain in news for longer than it would really want. Here, we draw a timeline for you.

1 March: WPP CEO Sir Martin Sorrell reports a 0.9% fall in 2017 net sales and a 0.3% drop in annual revenues in the company’s annual results. He describes 2017 as “not pretty” for the group and promises to accelerate the simplification of its structure that began in 2017.

4 April: WPP confirms that it has launched an investigation in response to an allegation of personal misconduct against Sorrell. He issues a statement rejecting the allegation unreservedly.

14 April: Sorrell resigns as chief executive of WPP. Mark Read, chief executive officer of Wunderman and WPP Digital, and Andrew Scott, WPP's corporate development director and chief operating officer, Europe, are appointed joint chief operating officers of the company, with Roberto Quarta, chairman of WPP, becoming executive chairman until Sir Martin’s full-time successor is chosen. WPP’s shares fall 4% on the news. The FT reports that Sorrells departure is so abrupt, no non-compete arrangement is in place when he goes.

30 May: Plans are revealed for Sorrell to become executive chairman of investment firm Derriston Capital. The company will then acquire S4 Capital and adopt its brand. In a statement, Sorrell says S4 Capital “aims to build a multi-national communication services business focused on growth” and says there are significant opportunities for development in technology, data and content.

12 June: On the eve of WPP’s AGM, joint chief operating officer Mark Read emails all staff to remind them of the group’s values. “I feel we should remind ourselves of and reinforce the kind of values we want and need to have within every part of our business: values of fairness, tolerance, kindness and – again – respect,” he says.

13 June: WPP’s first AGM since Sir Martin’s departure hears of a 3.4% year-on-year fall in global revenue for the first four months of the year to £4.822bn. The group reports growth in Western Continental Europe, Latin America, Central and Eastern Europe and Asia Pacific, but says North America is a “difficult” market, especially in the advertising and data investment management businesses.

21 June: Sir Martin Sorrell breaks his silence and speaks to The Drum editor Stephen Lepitak at The Drum Arms, at Cannes Lions Festival, in his first ever interview following his dramatic departure from WPP.

3 July: News breaks that both S4 Capital and WPP are bidding to acquire Dutch digital production house MediaMonks.

5 July: WPP warns that any breach by Sorrell of his exit agreement would result in him forfeiting his £20m payoff.

6 July: WPP warns that Sorrell’s bid for MediaMonks is “unlawful”. They claim it violates confidentiality clauses by being based on information he gathered while still at WPP, where MediaMonks was already a takeover target. Sorrell disputes the claim.

10 July: Sorrell’s S4 Capital makes its first acquisition, beating WPP to the purchase of MediaMonks.

3 September: WPP names Mark Read as chief executive. His co-interim joint chief operating officer, Andrew Scott, continues as chief operating officer on a permanent basis. Read sends a memo to all 140,000 WPP staff outlining his vision for the group. In it he says WPP will be “absolutely focused on what our clients need, and we won’t let our own structures distract us or get in the way. As part of that simplification we’ll adopt much more of a common approach to things like technology, data and production. And we’ll invest in new areas – such as artificial intelligence and programmatic media – that are reshaping our industry.

4 September: At the announcement of WPP’s half-year results, Read says his focus as CEO “will be on invigorating our company and returning the business to stronger, sustainable growth.” He announces a strategic review to address “our structure, our underperforming operations, particularly in the United States, and how we position the company for the future.” He promises the results by the end of the year.

Read also announces revenue for the half-year down 2.1% at £7.493bn, but Q2 2018 revenues up 2.4%. The group also generates £676m by selling stakes in 15 companies, including Argentinian software development company Globant and US programmatic software company AppNexus.

12 September: S4 Capital publishes its shareholder prospectus, setting out plans to compete with both ad agencies and consultancies. It aims to make further acquisitions in content, data analytics, media planning and digital media buying.

26 September: WPP merges Y&R with digital agency VML to form VMLY&R, which Read says will be “a core agency brand”. It will be run by VML boss Jon Cook.

27 September: S4 Capital begins trading on the London Stock Exchange.

8 October: This was a “bad day” for WPP when it lost Ford, and the car marque named Omnicom’s BBDO as lead creative agency. WPP had previously held the entire Ford business in a multi-agency effort named Global Team Blue. WPP retains Ford’s media planning, buying, shopper and performance marketing, as well as website development, customer relationship marketing, multicultural and tier two dealer advertising.

10 October: Group M begins to act on WPP’s plans to encourage greater cross-agency collaboration by bringing the head offices of its agency brands together in shared campuses. The new Group M HQ in New York houses Mediacom, Mindshare, Essence, Wavemaker and Xaxis, with similar plans for a new building in Toronto, mirroring existing set-ups in Amsterdam and Shanghai.

24 October: WPP consolidates its health agencies into its US agency brands to create a new healthcare offering. VMLY&R absorbs the Sudler network to form VMLY&R Health; Ogilvy CommonHealth joins Ogilvy to become Ogilvy Health and Ghg joins Wunderman to create Wunderman Health. Health offerings at Grey and J. Walter Thompson continue unaffected. Health umbrella group WPP Health & Wellness is retired.

25 October: WPP reports third quarter revenues down 0.8% to £3.758bn, and revenues for the first nine months of the year down 1.6% to £11.251bn. It also says it expects full year revenues to be down between 0.5% and 1%, compared to earlier estimates of 0.3%. The company’s share price falls 20% on the news.

Read blames the fall in revenues on “a further weakening of the performance of our businesses in North America and in our creative agencies”. He also announces board approval for his plans to sell a stake in research arm Kantar.

2 November: WPP freezes hiring until early 2019 to “try and protect” the business, according to Bloomberg reports. The Drum subsequently reveals Wunderman and Essence will not be subject to the restrictions, as they are seen as crucial for continued growth.

26 November: WPP announces the intention to create 'a new agency' with the merging of Wunderman and JWT to become Wunderman Thompson with Mel Edwards a global chief executive and Tamara Ingram as chair.

December: The results of Read’s strategic review of WPP’s operations are expected.

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