Why low expectations could bring big rewards for WPP

It’s always good to talk down your prospects in the City because, if nothing goes too pear-shaped, investors will think you’re doing well.

New WPP CEO Mark Read has been resolutely downbeat in his considered way and it seems to be paying off. Deutsche Bank, which has its own problems but that doesn’t stop City analysts opining about other companies, has upgraded the struggling British marcoms giant from hold’ to ‘buy,’ remarking that if there is “any indication” that operations were less bad than the market is expecting then the positive reaction would be “substantial.”

Which would mean the shares rising from the current £8 or so to £10, still way down from their peak of about £17 but enough to deliver a handsome 20 per cent return for investors.

This is clearly an opportunity for Read but his needs to choose his timing carefully. Saying you’ve turned the corner when you haven’t is deemed unforgivable.

At the same time WPP has moved into its vast new “campus,” in Amsterdam, bringing together most of its agencies. A similar move looks on the cards in London as WPP is planning to move into the former Financial Times HQ on London’s South Bank (above), just along the river from Ogilvy’s Sea Containers HQ which now houses Read and co. too.

That in itself has been a success. Read and COO Andrew Scott decided to quit the company’s Mayfair HQ (handily situated for Shepherd Market) as part of a clean break with the Sir Martin Sorrell years. Having the boss and his lieutenants in a spanking new office building, alongside agency staff, makes the company look much more fit for purpose.

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