WPP starts 2022 strongly, raises guidance to 6% and rejigs GroupM into new data-based pyramid structure

WPP has joined rivals Omnicom and Publicis in moving strongly into 2022 (Ukraine war notwithstanding) reporting organic growth of 9.5% across the board on a revenue increase of 6.7% to just over £3bn in Q1.

WPP’s measure of organic growth is like-for-like revenue less pass-through costs (not exactly the same as its rivals.) In Q1 the US grew 8.9%, UK 8.1%, Germany 16.1%, China 11.9% and India 25.1%. Most of WPP’s businesses performed either well or reasonably although it’s a changing picture at WPP with a big media agency reorganisation (some would say rationalisation) also announced (full story below,)

WPP has also confirmed its intention to enter end-to-end digital commerce with its new Everymile entity.

CEO Mark Read says: “The year has started very well with continued momentum from 2021 resulting in strong growth across all businesses and regions. Demand is strong for our services, particularly in digital media, ecommerce, data and marketing technology.

“The war in Ukraine has created an appalling humanitarian crisis. We continue to support our people in Ukraine, many of whom are now displaced, with financial and practical assistance. Our partnership with the UNHCR on their emergency fundraising appeal has generated $150 million to date, including over $1.3 million from our employee match-funding programme. On 4 March, we announced that we would exit the Russian market, and we have now reached agreement to divest our businesses there.

“We continue to see strong demand for our services from our clients and to invest in the many opportunities for growth driven by the digital transition, including Choreograph and the recent launch of Everymile. As a result of a strong first quarter, we now expect our growth to be in the range of 5.5% to 6.5%, up from around 5% at the start of the year. We remain very mindful of the impact of the broader macroeconomic environment on our business and will respond quickly to any changes as the year progresses.”

WPP’s media agency re-jig

Is the lengthy period when the big holding company-owned media agencies dominated the ad world coming to a close?

For years WPP’s mighty GroupM has driven that organisation and, to a lesser extent, the media operations of its rivals. But now WPP is moving to a new structure, merging its biggest media agency Mediacom with tech specialist Essence (and dropping the cap ‘C’ in MediaCom) to form EssenceMediacom and moving to a new three-tier structure with digital and performance marketing firmly in the driving seat.

We remarked last week that Mediacom’s retention of Sky in the UK, which it largely credited to a new Google ‘practice’ showed who was calling the shots in media now (Google and the other tech companies) and Group M’s new structure appears to reflect that.

This so-called ‘pyramid’ structure has WPP’s newish data company Choreograph at the base, in the middle a new entity Group M Nexus, which includes former programmatic company Xaxis and offers performance activation, AI and machine learning among others and, at the top, although not necessarily the priority, the new big three media agencies: EssenceMediacom, Mindshare and Wavemaker.

In essence, to coin a phrase, it’s a tech company with three big media agencies (which still employ thousands of people) attached.

GroupM CEO Christian Juhl says: “I’m really optimistic about where media sits right now. I think that the performance element, the outcomes-based element will be transformational for the industry. We’re seeing big contracts where we’re taking risks along with our clients, and have the opportunity to benefit with our clients. More clients are saying, how do you tie your success to ours?”

Which may be a big opportunity but it’s also quite a risk and means WPP/GroupM going head to head with consultants and other big digital players like Salesforce.

At some stage WPP CEO Mark Read had to rationalise his media agencies as he has creative agencies by merging JWT and Wunderman, VML and Y&R and AKQA and Grey. These, now defined as specialist agencies, grew 5.6% in Q1 with production specialist Hogarth the strongest performer.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

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