Cindy Rose, the new CEO of agency group WPP since September, was never going to have an easy debut on her first quarterly earnings call. The news of her appointment back in July came just one day after the company issued a profit warning, as a slowdown in client spend and significant business losses caused WPP to lower its full-year growth guidance.
As it turned out, conditions were even worse for WPP in the third quarter than previously expected. Like-for-like revenue less passthrough costs fell by 5.9 percent year-on-year, as client losses started to bite and existing partners continued to pause and push back projects. The agency group expects continued deterioration in Q4, and now expects organic revenue to fall by between 5.5-6 percent.
The benefit for Rose is that, as a fresh face still only 60 days into the job, she can hardly be blamed for WPP’s Q3 performance. Her task is to map WPP’s path out of the mire it finds itself in.
That path is yet to fully be revealed. Rose said on today’s earnings call that a full strategic roadmap will be laid out early next year. But she did indicate the direction she wants to take the business in — one which seems to largely follow the steps taken by her predecessor Mark Read, but which Rose says must be taken further, faster, and with better execution.
A little less holdco
One of Rose’s priorities over her first two months in the job has been speaking with clients, including ex-clients which have switched to other agency partners in recent years, to get a sense of where WPP has been falling short.
A lot of the feedback has been positive according to Rose, hence why she believes the agency is moving in the right direction. But those conversations have also outlined where more work needs to be done, and informed Rose’s blueprint for WPP going forward.
The first big focus will be continuing to simplify WPP’s offering from a client’s point of view. “[Clients would] like us to be simpler to engage with,” said Rose. “They’d like a more integrated proposition, because when your proposition is integrated across creative production and media, it’s easier to optimise your total investment spend, particularly when it’s powered by a common data model and AI across the entire workflow. We’re more able that way to deliver growth and business outcomes, and that’s where we need to be.”
Clients which WPP has lost recently have said they’ve found it hard to understand WPP’s end-to-end story, and how it would help deliver on their own business objectives. Hence the need to continue to break down barriers internally and simplify the overall offering.
One analyst on the call suggested that this requires an overall shift away from a holding company model, to become more of an integrated operating company, and Rose seemed to agree with this sentiment. “To improve our execution as we need to, I personally think we need to be a little less holdco, and a little more co,” she said. “I do think we are on the path to doing that.”
Improved execution will be another big focus for the company. “It’s clear that we need to significantly improve our execution, with singular focus on client acquisition and service delivery excellence, strengthening our go-to-market, dramatically simplifying how we organise ourselves internally, as well as systematically building a high performance culture,” said Rose.
Throughout the earnings call, Rose emphasised that WPP’s existing investments in its AI tools, as well as its acquisition in data matching business InfoSum, have put it in a good position to succeed. The key now is to ensure the company gets the most out of these investments, and is able to effectively pitch its new capabilities to potential partners.
“Have we learned to land the story consistently in a way that resonates with our clients? No, we haven’t,” she said. “That is fundamentally part of the execution improvement we’re focused on.
Building a high performance culture meanwhile will require some leadership changes, according to Rose. But one person who needn’t fear being replaced is WPP Media’s CEO Brian Lesser. Rose emphasised repeatedly that she fully supports Lesser’s turnaround plan for WPP’s media arm.
Growing WPP’s market
One of the big announcements from Rose’s tenure so far was last week’s launch of WPP Open Pro, a client-facing version of WPP’s own AI platform which clients can use to build and publish campaigns themselves, while also accessing managed services from WPP where required.
Rose said on the earnings call that a large part of the strategy with Open Pro is opening up opportunities for WPP to work with smaller clients. And growing WPP’s total addressable market through enterprise and technology solutions is another of Rose’s strategic pillars going forward.
It’s a delicate balance to tread, since WPP will likely want to attract new client partners without pushing existing clients onto a self-serve platform. Rose didn’t directly respond to a question from one analyst about whether Open Pro might cannibalise existing business, and not much new detail was given about the product, as Rose pointed out repeatedly that it only officially launched last week.
In the short term, these sorts of new products will be based on WPP’s existing asset set. Rose’s fourth and final priority going forward is to strengthen the company’s financial foundations, taking a disciplined approach to capital allocation. Asked about potential M&A, Rose said that there are undoubtedly businesses and products which WPP would love to buy, but for the time being, it will make do with what it already has.
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