The ad industry spends so much time worrying about media targeting and optimisation and “not nearly enough” about the creative message and it must have at least “equal weight”, Mark Read has told Campaign.
The WPP chief executive was speaking at its annual results where he explained the need to invest further in creative capabilities, including two senior appointments: Rob Reilly, who is joining from McCann as global chief creative officer of WPP, and Dave Rolfe, formerly of Facebook, who has been named the first global head of production of WPP and Hogarth.
Read has been candid about WPP’s creative under-performance – revealing at an investor day in December that all four of its legacy ad agency networks, Grey, JWT, Ogilvy and Y&R, suffered declining revenues between 2015 and 2019, while media-buying arm Group M grew – and he has made reinvesting in creativity a priority.
He described the hiring of Reilly as significant. “I think of him as my partner,” Read said. “It demonstrates that the creative community should have a seat at the top table when important decisions are made across the company.”
Reilly, who has been the global creative chairman of McCann Worldgroup since 2014 and helped to create the Fearless Girl campaign for State Street Global Advisers, will join in May, replacing the role left vacant when John O’Keefe, WPP’s previous global chief creative officer, departed in April 2020.
Asked at WPP’s investor presentation this month about Reilly’s likely impact, particularly on the North American creative operation, Read said: “Rob will be important but one person is not the solution fixed. He’ll be important when we do better work for clients, when we hire better people, when we train the people that we have already.”
Digital content production is a growing battleground
Rolfe’s role as global head of production is new and Read said it reflects “the importance of production in bringing great creative ideas to life” as advertisers want more fast-turnaround creative and ecommerce assets.
Digital content production has become a growing battleground – with Hogarth facing competition from rivals such as Publicis Groupe’s Prodigious, S4 Capital’s MediaMonks and Accenture Interactive.
The WPP production arm has been adapting and already “does a lot of work with many of the big technology players”, according to Read, who explained how the nature of the work has been changing.
“What you hear consistently from clients is that they need a greater volume of creative assets to sit inside all of the new channels that exist and it’s no longer good enough just to re-purpose a TV ad or press ad into a banner ad.
“We have to think about how we produce the right content for the right channels – producing work for Facebook or Instagram or Amazon requires distinct skills and understanding of those platforms.”
Read went on: “We spend a tremendous amount of time worrying about media targeting and programmatic media and optimisation but we don’t do nearly enough, I’d argue, to think about how to personalise the creative messaging that goes to consumers and that has to have equal weight.”
He acknowledged that personalisation may have limits because Google is stopping the use of third-party cookies and Apple is introducing new privacy curbs on tracking.
However, he said they are moves “in the right direction” because “we have to respect the consumer’s privacy” and “if we do that in long run, we can maintain a healthy data-driven advertising eco-system”.
That can mean creating messages that are “more relevant, not necessarily personalised”, Read said. “Relevance can come in many ways – personal data just being one part of that. There are many ways to target messages that we’ve learned from analogue media over many years.”
“Optimistic” about creative agencies
WPP’s annual revenues less pass-through costs fell 8.2% last year, which meant it ranked third in growth terms among the big agency groups during the pandemic, behind Interpublic and Publicis Groupe but ahead of Havas, Omnicom and Dentsu.
WPP, which has repositioned itself as a creative transformation company for clients, did not give a revenue breakdown for its creative agencies but there were some signs of progress, following the internal mergers of Y&R with VML and JWT with Wunderman (both in 2018) and Grey and AKQA (November 2020).
VMLY&R moved into growth in Q4 2020 and Wunderman Thompson was the second-best performer last year, according to John Rogers, chief financial officer.
The “marriage” of Grey and AKQA to form AKQA Group has also had “some initial, quite positive reaction from clients”, Rogers said, although WPP talked in its results about an “alignment” of the agencies, rather than a single brand, and Grey has continued to make its own appointments, including a president of Grey London and a CEO of Grey Argentina, in recent months.
“We said consistently that in forming the AKQA Group, we’d have both the AKQA and Grey brands,” Read said, adding the agencies have been working together on new business pitches and AKQA recently won a “web-build” for an existing Grey client in New York.
“The focus is really on the client opportunities, much more than it is about the integration of the businesses and the brands,” he said.
Rogers said Ogilvy “is probably a little bit more challenged” but Andy Main, who joined from Deloitte Digital as global chief executive, is “doing some great work” and bringing new talent and “we expect to start to see that business turn around”.
In a further sign that WPP is still coming to terms with its long history of acquisitions, the company took a £2.8 billion writedown in its 2020 accounts on the value of several agencies, including parts of Wunderman and Y&R, which were originally subsidiaries of Y&R Group – WPP’s most expensive purchase at $5.4 billion (£3.9 billion) in 2001.
Read played down the writedown, pointing out it was “historic”.
Some rival agency groups have told Campaign privately they were surprised that Read disclosed the full extent of WPP’s five-year decline in creative agency revenues and suggested it reflected more on WPP than the creative agency sector.
“The facts are the facts,” Read said, adding: “I am very positive about the future for our creative agencies. What we’ve given them [by merging them internally with digitally-focused businesses] is greater growth platforms that they need – not just in advertising but also healthcare, commerce, marketing technology, and we’ve integrated their offer, so there is no longer an analogue and digital silo.
“They’re simpler, better businesses. In some places, they have returned to growth or they will return to growth over the [coming] year.”
WPP also told investors it is looking to carry out more M&A, after halting virtually all acquisitions during the last two years of internal restructuring.
Arthur Sadoun, chief executive of Publicis Groupe, told Campaign in February that its transformation was “complete”, after making two big acquisitions, Epsilon in 2019 and Sapient in 2014.
Asked to describe WPP’s progress on its own transformation, Read said: “In an industry as fast-moving and as changing as ours, no transformation is ever complete.”
Four key trends to emerge since the pandemic
Looking back over the last 12 months, the WPP chief executive said: “One thing that the pandemic has demonstrated [to clients] is the importance of communication.”
He identified four key trends, media, commerce, purpose and localisation, and said they could all benefit WPP.
Streaming has been the big change in media in terms of video consumption.
“Many of those services are subscription-based, not advertiser-funded, though I think we expect to see more advertiser-funded VOD platforms launch like Peacock, Hulu and others,” Read said. “A stronger media environment, more competition, more disruption, more choice is good for WPP and good for our clients.”
Ecommerce has been the great shift in term of commerce and WPP is working with more than 70 of its top 100 clients on ecommerce strategy.
Purpose has also risen up the agenda during the crisis and brands want help to “communicate what they’re doing around purpose and their ESG agenda”, he said. “I think companies feel they’re doing a tremendous amount but don’t necessarily get credit for it from their shareholders or their customers or indeed their people.”
Read is also seeing a shift away from “regionalisation” towards “localisation”.
He described a “multi-polar world” in which China, in particular, and India and Brazil are all “becoming very important in their own right” as well as the United States. “That’s beneficial for WPP because our clients will need to have distinct marketing strategies for those markets,” Read said, explaining how they need to “get the right balance between local and global”.
He added: “Regional is increasingly going out of fashion but local is coming back.”
Return to the office
The return to the office is another big issue for WPP, which employs almost 100,000 people globally.
The company has already said it expects to cut office space by up to 20% and travel by a third but Read said there are a lot of nuances.
“We need to take a step back and think about all of the changes that technology has brought – what is in the best interests of our clients, what is in the best interests of developing our people and also providing people with the flexibility to manage leading their life,” he said.
“I don’t think personal productivity is the only metric of effectiveness in an organisation,” he added, in a hint that agency culture and face-to-face teamwork are other important factors. “It’s going to be a balance.”