The story of WPP’s journey from a manufacturer of wire baskets to the world’s biggest ad firm has been told innumerable times. No one could doubt the corporate success of Sir Martin Sorrell in turning the company into a global behemoth with revenues and profits in the billions and changing the marketing landscape in the process.
But it is clear WPP wants to put the Sorrell era behind it. The announcement of Read’s appointment did not once mention or thank his predecessor, instead seeking to make a break with the past and talk about the company’s future.
There are many reasons why this is necessary. As is becoming increasingly clear, WPP’s old model of growing through acquisitions and stripping out costs is no longer the best way to build (or maintain) a company. The new WPP must be less about cost cutting and more about understanding clients’ needs and building quality relationships.
Matti Littunen, senior research analyst at Enders Analysis, says: “Starting from the needs of the clients and integrating capabilities sounds good, but is very difficult to do in practice across a large holding group structure. However, Mark Read has experience of integrating very different types of teams as he helped turn Wunderman from a direct marketing agency to a more holistic digital shop (absorbing several agencies along the way).
“I liked the phrase ‘we won’t let our own structures distract us or get in the way’ – most effective treatments start from the right diagnosis, and this one is spot on.”
WPP also needs to find new ways to make money. The company is overly reliant on revenues from media, production and creative, all of which are under pressure from clients looking to cut costs, introduce zero-based budgeting and bring services in-house.
Instead, WPP must look at areas where brands are wanting to invest. The creation of chief customer officer roles shows the focus of the marketer is more towards the full customer experience and the end-to-end customer journey.
But the likes of WPP are poorly equipped to handle this, leaving the door open for the consultancies to grab a foothold in the industry. WPP under Read needs to better understand these new priorities and work out how it can offer added-value, marrying the services it offers now with solutions that help marketers better manage technology and data to deliver that seamless experience. Or the consultancies will.
WPP itself also needs to become a brand in its own right with a unique positioning that gives clients a reason to choose it (rather than just cost) and talent a reason to work there. WPP was a company built on the personality of its founder; dig beneath that and it stood for very little. In the end, WPP was basically just an administrative entity with little in the way of corporate brand, no discernible company culture and no positioning beyond being the world’s biggest.
The company’s statement about the appointment of Read is telling in its focus. Chairman Roberto Quarta speaks of Read’s understanding of the importance of culture in creating successful organisations, calling him “in every way a 21st century CEO”.
And in Read’s internal memo to staff he talks of fostering a culture that “attracts the best and brightest: inclusive, respectful, collaborative, diverse”.
Building the WPP of the past 30 years meant taking Sorrell’s strategy and acting on it, everything was defined in his terms. Read’s focus for building the WPP of the next 30 years is on “shared endeavour”, working with and listening to staff throughout the company.
Creating that culture may take time at WPP but it will be necessary for future success. Companies that put employee wellbeing at the heart and value their contributions are the ones succeeding in today’s economic climate.
That shift will be key to building the WPP of the future because wider challenges across the industry mean change is needed, and fast. WPP needs to be leaner, less bureaucratic and better able to react to clients’ needs.
Read talks of the need for “simplification”. That will involve some difficult decisions on which agency brands to keep and which to get rid of but also streamlining the way it works so its practices are more transparent and it has one way of dealing with new technology and data, for example.
WPP picked Read because he understands the business and its clients and knows what needs to be done to position it for the future. But it is the culture job that requires the biggest mindset shift to take WPP from a holding company that is about cost cutting to one that invests in quality and adding value. That is a shift that couldn’t take place under Sorrell but that must be Read’s priority.
As Read puts it: “What makes our company special is its people, and I am very proud to have been given the chance to build a new WPP with them.”