Cindy Rose outlines 4-point turnaround plan as WPP posts ‘unacceptable’ Q3 results

The results she shared are not good: revenues for the quarter (£3.3bn) are down 8.4% year-on-year (or 3.5% on a ‘like-for-like’ basis), with step-downs across most markets, sectors and operational areas.

The holding company has downgraded its guidance to investors on full-year sales forecasts. On its overall growth outlook, having previously predicted contractions of between 3% and 5%, it now expects declines of 5.5% to 6%.

The results pile pressure on the already-embattled WPP. Rose stepped in 60 days ago, following predecessor Mark Read bowing out in June when the firm’s share price hit a five-year low, then a profit warning in August, at which it posted pre-tax profit drops of 71%.

Today’s results paint an even grimmer picture, with investors warned that the slump will continue into Q4. The firm’s share price has accordingly fallen further: market capitalization for the firm, which was once over £25bn, fell below £4bn towards the end of Read’s tenure. Today, it has dipped under $3.4bn.

WPP Media, the freshly renamed and consolidated media offering that lies at the heart of the firm’s profitability efforts, has been hit particularly hard, with revenues down 8% (or 2.8% on a like-for-like basis).

On the call with investors and analysts, Rose and chief operating officer Joanne Wilson laid out what’s behind the continued fall. WPP Media, they said, is continuing to be hit hard by major account losses (recent media losses of the likes of Mars, Coca-Cola and PayPal to rival Publicis run into the billions and have not been offset by glimmers of hope like landing Mastercard’s $180m account) – losses that will still be felt until at least the end of the year. They also cite failure to win enough new business and continued volatility and caution in marketing spend.

Rose, who analysts expect has a year to resuscitate the ailing behemoth, acknowledged in a public statement “that our recent performance is unacceptable” but insisted that “we have strong foundations and the ingredients needed to succeed,” citing key leadership changes and an ongoing “strategic review” that, she says, is already bearing fruit as the holdco attempts an AI-dominated repositioning

“There is a lot to do,” said Rose. “And it will take time to see the impact, but in my first 60 days, we are already moving at pace with some initiatives already announced and more to come. We know what it takes to win: we are optimistic, energized and confident that we’re building the right plan and the right culture to secure a bright future for WPP, our people, our clients and our shareholders. We look forward to sharing more details early in the new year.”

WPP’s next 3 months: a 4-point plan

Anyone paying attention to Rose’s first 60 days won’t be surprised by the four-point plan intended to calm investors revealed on today’s earnings call.

Two letters are shot through the entire four-point plan: AI. In AI, she insists, WPP is “still in a strong position to lead the market” – amid otherwise dour news, Rose even found cause for optimism from the firm’s AI position.

“I personally believe there’s never been a better time to be in marketing, Rose said. “You could even say that AI will usher in the golden age of modern marketing and WPP is uniquely positioned to deliver on this vision and support our clients as the trusted partner of choice as they navigate through an increasingly complex world, rapidly evolving technology landscape, shifting consumer behavior and resource constraints.”

The first element of Rose’s plan is: “Simplifying and integrating our client offer and harnessing our AI advantage to deliver growth and business outcomes for our clients.” On the call, Rose acknowledged client feedback that the holding company’s offer is very complicated. “They’d like us to be simpler to engage with; they’d like a more integrated proposition”.

This integration move is already underway with the consolidation of WPP Media and the launch, last week, of WPP Open Pro, a self-serve AI offering which goes out to clients under the WPP banner rather than that of one of its subsidiary agencies.

WPP Open Pro is live as an offering, but Rose deflected questions about pricing and commercial models other than to say that it will be priced “by user and by usage.”

In response to concerns that it will cannibalize the firm’s traditional agency business, Rose said that Open Pro will be additive rather than competitive. “This is a strategic move to expand our addressable market and serve the long tail of smaller companies and emerging brands who may not be in the market for the sort of full-service offer that we typically provide to large multinational clients. Open Pro clients can choose to self-serve for some aspects of the marketing workflow and then complement this with a range of managed services from WPP.”

In response to a question from one analyst on today’s call on whether WPP is moving away from being a holding company with this centralization push, Rose acknowledged: “I personally think we need to be a little less holdco and a little more ‘co.’

“I do think we were on the path to doing that. We’ve made, over the years, great investments in AI and technology. We’ve simplified our structure, we’ve nurtured fantastic talent. We just haven’t gone – or we’ve missed the opportunity, shall I say, to go – as far and as fast as we could have and should have. That’s what we’re going to do immediately to improve our execution”.

The second element of her plan is to, “significantly” improve its execution and to build “a high-performance culture.” Here, Rose cites key leadership changes – her tenure so far has seen appointments including Devika Bulchandani as chief operating officer of WPP and Laurent Ezekiel as global CEO of WPP agency Ogilvy Group – and said today that there are “many more changes to come.”

Third is expanding its “addressable market through enterprise and technology solutions.” Here, the recent launch of WPP Open Pro is a lynchpin, as is the recent announcement of a $400m renewed partnership with Google – but so is the firm’s other major data play this year. Back in April, WPP announced the acquisition of data shop InfoSum as the final piece in its development of an alternative to competitors’ identity-based approaches to data.

Today, Rose says she has absolute faith in that vision and its architect, WPP Media head honcho Brian Lesser. “I would be the first to say that [WPP Media predecessor] GroupM in the past probably lost its way, but I feel very confident that Brian’s vision of an open, privacy-first data and AI-powered ecosystem is the way the market is moving. Now that we’re putting that plan into action, I’m supporting Brian in every way possible in terms of implementation and we’re starting to see the main shoots of success with important retentions and wins this quarter.”

Rose’s final strategic pillar is strengthening its “financial foundations and performance through operational efficiency and a disciplined approach to capital allocation.”

Full details of the plan, Rose says, will be available in the new year.