A WPP trading update without Martin Sorrell at the helm will take some getting used to, but interim co-COO Mark Read managed to step elegantly into his former boss’s shoes without dancing on his grave.
The secrecy around Sorrell’s departure continues to raise questions. Asked why the board won’t reveal the reasons Sorrell quit, chairman Roberto Quarta impatiently replied: “For the umpteenth time, Martin resigned. Martin was not terminated… Matters around personal misconduct – highlighting the word ‘personal’ – we consider to be a matter of privacy, and therefore it’s a matter for Martin.”
Read was more good-humoured and gave the impression of a man with a plan. He started out by promising: “There will be no standing still” before tackling — alongside co-COO Andrew Scott and chief transformation officer Lindsay Pattison – pretty much every perceived areas of weakness at WPP.
A disposal of the underperforming Kantar was by no means ruled out. Read spoke about the importance of the business, but added that it’s not the only source of data for WPP. He pointed out that there’s a big data business within Wunderman, and reminded analysts that none of the other big holding companies has an insight division.
There was a hint that WPP might dispose of some of its minority investments, which could release as much as a couple of billion pounds in cash to reduce debt, but M&A activity won’t stop while the new CEO is being recruited.
The overall message was that WPP would become faster, more agile, more integrated and more driven by data and technology.
Where Sorrell complained about packaged goods companies’ declining spend, Read wanted to do something about it. He said: “It’s incumbent on us to shift our offer to reflect where packaged goods companies are shifting their investments, and provide the right model to help them connect with consumers.”
Sorrell had been accused of not taking the consultancy threat seriously enough, but Read is not making the same mistake. “Companies like Accenture and Deloitte are increasingly starting to compete for the growth opportunities in our market,” he said. “We need to understand that, and to combine our traditional strength in creativity with newer skills in data and technology. Creativity is our differentiation. Consumers need ideas and inspiration, it’s not just a simple matter of connecting the pipes.”
WPP’s outdated “Horizontality” model, which brings together teams from different agencies to work on a client but has always been held back by conflicting P&Ls, also came under fire. Pattison (who is on the record saying she would like to be WPP CEO herself one day) said: “We may have to RIP that word” and promised “a more fluid and flexible model that will have a single tech spine at the centre of it.”
Andrew Scott promoted the idea of creating “co-locations” similar to the Shanghai office, where 4000 people work together in a similar set up to Havas’ Villages.
On the Ford pitch, Read was at pains to make it clear that only the global creative assignment is under review. So far, the more lucrative media business is unaffected, as are China, the Lincoln Motor Company, the dealer business, production, and public affairs.
WPP’s share price was up around eight per cent today on the back of the first quarter results.