Cindy Rose’s appointment as CEO of WPP has certainly been a baptism of fire. The October profit warning, which cut full-year FY25 organic net revenue guidance to a 5%-6% decline, down from 3.5-5%, rattled already-nervous investors who had endured multiple downgrades in recent years. As a result, Rose has not had the luxury of being able to take time to reflect on what needs to happen next.
In fairness, she has done a good job of that stabilisation so far.
While the share price has not recovered (it is hovering around 300p as I type), it has not declined further, which is a positive. That reflects Rose has persuaded investors—for now—that she has a plan. There has also been some good news on account wins, with the consolidation of the Henkel business in Europe a plus. Perhaps, most importantly, WPP is now developing a clear narrative that was perhaps lacking before as to how it will recover its position, with WPP Open receiving £400 million investment to both help the company boost its technology offering and move into the SME market.
There is a question here, though, that needs to be answered: Does the new strategy rely too much on technology and not enough on WPP’s natural strengths?
Arguably, the cause of WPP’s major problems is that it has not had a clear narrative and strategy, which has led, both internally and externally, to a lack of confidence in the business itself. In turn, that has led to an exodus of business and staff.
Rose’s announcement certainly gives WPP a clear narrative, as I mentioned above, but the question is whether it is the right one. Technology is certainly central to the advertising industry and Publicis has shown that a clear narrative aligning technology with clients’ needs is a winning proposition. But an agency’s true core competency should be that it understands both its clients’ needs and how it can sell those needs to consumers. Technology should be a tool to deliver that, not the strategy itself. At times, WPP’s narrative can come across as if technology is the strategy.
That positioning raises several related risks. For a start, agencies simply cannot win a race with the technology platforms when it comes to technology: they (the agencies) simply lack the ability and resources to do so. If it becomes all about the technology, then many clients will simply decide it is better—and cheaper—to deal directly with the platforms themselves rather than going with the agencies.
There are also risks with WPP’s alignment with Google, especially around WPP Open. The appeal to WPP is clear: by aligning itself with Google, WPP hopes to show both clients and shareholders that it is not being left behind when it comes to technology. But the optics matter. Google CEO Sundar Pichai’s absence from the recent announcement, with Google’s CMO standing in instead, was notable. If Google were to de-prioritise the partnership tomorrow, the impact on WPP would be meaningful. For Google, it would barely register.
There are also more fundamental questions. Would Google allow WPP Open to make serious inroads into the SME market, given SME’s importance to Google, where SMEs make up probably close to 80% of revenues? Would Google pressurise WPP directly or indirectly to push YouTube into the planning of advertisers’ TV budgets?
There is a phrase that says, “to a man with a hammer, everything looks like a nail”. In today’s agency world, the consensus seems to be that a lack of technology offerings is the problem and that the key to the solution is more technology. It is not. It is that the agencies by CEOs and CFOs are perceived to be a commoditised product, and technology will not resolve that problem (interestingly, I would argue Publicis’ secret sauce is not its technology but its leadership and narrative). The only way to resolve that is to go back to the basics of the advertising industry and its core competencies, and at the heart of that lies the most valuable resource of all: people.
As usual, this is not investment advice.
Ian Whittaker is the founder and managing director of Liberty Sky Advisors. He writes a regular column for Campaign about the advertising landscape from a financial standpoint.
