WPP, because of its scale and the number of companies it owns in different sectors of the global ad market, has become a kind of investment trust for advertising and marketing. If you think the global economy is recovering and marketing budgets are going to go up: buy WPP.
But how is WPP going to improve its own performance?
Here are five questions for investors:
1/ Is the company rationalising its businesses (there are too many of them) in a way that doesn’t impact adversely on those self-same businesses its shareholders have spent a fortune acquiring?
2/ When will market research business Kantar (the second-biggest such in the world after Nielsen) start to make decent money?
3/ What is the company’s medium-term strategy? Does it want to remain an agency and media-buying group or is it trying to create a vertically-integrated data-based media and production business; a sort of Apple (you buy it here or you don’t buy it at all) for the 21st century?
4/ How will it reduce its £3.6bn debt? Disposing of one or more of its ad agencies could be a way: increasingly big clients are buying WPP as a group, not one of its agency brands.
5/ Where’s the succession plan to replace CEO (and founder) Sir Martin Sorrell?
WPP is a towering achievement, no question. In the global marcoms stakes its only two rivals are Omnicom, stolid and conservative but profitable based on the performance of its big three agencies BBDO, DDB and TBWA and media group OMG, and Publicis Groupe, which has delivered the best big marcoms profit increase to date for 2012.
WPP might struggle to match these figures. The obvious way is to focus more and get (temporarily) smaller. Can’t see it somehow…