While a decline in advertising spend during the COVID-19 pandemic has weighed down WPP's revenue, CEO Mark Read has said other parts of its business—such as public relations—are seeing greater interest, as he looked to emphasize that the group is "more than just advertising".
Speaking at Advertising Week JAPAC on Tuesday (June 9), Read acknowledged that while advertising is its golden goose, other services it offers are becoming more relevant to clients during COVID-19, meaning "it is not an existential challenge to us".
"Marketing is price, it is product and it is placement," he said. "We are seeing public relations move up the agenda—that business has seen a much smaller impact than elsewhere in WPP. We are thinking about how companies can make it easier for vulnerable groups to shop with them, and how they are looking at their product mix to address the demands of consumers at a challenging time. There’s many things companies can do and corporate advertising is just one of those."
The world's biggest agency group recorded a -3.3% drop in revenue in the first quarter of 2020, pulled down by -7.9% tumble in March revenue as the COVID-19 pandemic swept through the world. As a result, it has been forced to take some drastic cost-cutting measures over recent months, including voluntary pay cuts across more than 3,000 staff and an undisclosed number of permanent headcount reductions.
Read is "optimistic about the future for our business and the role we can play", but is also cautious about whether spend will ever fully recover.
"I’m in the 'Nike swoosh' camp: consumers are cautious and will remain cautious for a number of months to come. People are not going to rush back in a way that will lead to a V-shaped recovery, it is going to be gradual," he said.
He views the COVID-19 pandemic in three phases: react, recover and renew.
"The react phase is dealing with a crisis, what are we going to say to people. Now in most parts of the world starting to move to the recover phase as the number of infections decrease, which is thinking about how fast economies can recover, how to get back to market and connect with consumers," he said.
"What is interesting for us is this renew phase: how are things going to be fundamentally different, how are we going to recast our businesses and respond to the behaviour that has changed over the last 8-10 weeks in a much more meaningful way. It is going to reshape the office building, high street, university, financial services. We are going to have to ask ourselves much more fundamental questions about our businesses over time, how they operate, how we want the people inside them to operate and where we are going to place our investments as well, all against the backdrop of challenge between the US and China and the problems coming out of this dislocation this will cause."
Read said he wants to bring some of the working practices that WPP has developed over the past few weeks—which he said includes faster and more agile work and higher creative quality—into the company's DNA.
"When I talk to CMOs, they say 'let's not lose the way we have been working over the past few weeks in the future,'" he said. "That includes a really strong understanding of consumer behaviour to inform a brief, fantastic creative work and faster more agile processes with senior decision makers at clients and agencies more involved earlier the process. Getting on a Zoom call and discussing it together beats 'let's have three meetings over a two-week period' which could be the process in the past."
When it comes to returning to the office, he said WPP staff are split.
"It is clear there will be fewer people working in our offices post-this than there were before," he said. "The biggest barrier to working from home previously was senior executives not believing people could do it. Now all senior execs have been sent on a crash course of working from home, and we’ve seen it can be productive. The future of WPP is we will have slightly smaller offices, but I hope we don't lose the agility we have gained over the past few weeks."
Elsewhere, as COVID-19 has caused a "dramatic acceleration of trends" such as ecommerce adoption, he said consumers' willingness to pay for digital products has increased.
"People are getting used to doing things in different ways—there's massive growth in online exercise classes, rather than run a class to a group of 10 people each paying £20, you can run a class for 1000 each paying £5, so the economics can work in different ways," he said.
But he added that it remains "particularly challenging for digital media, because we have got used to over a number of years not paying for media".
"Those brands that have built a subscription relationship with consumers will prosper the most," he said, citing the New York Times as an example of a company that has done a good job of driving digital subscriptions but also investing in content and product. "That’s one of the challenges of free media, if your product isn’t that good people won’t be willing to pay for it," he added.