WPP’s outcome based bet and the structural questions the industry must answer

When the new CEO of WPP, Cindy Rose, took charge, I had written in one of my earlier posts that I admired her candour. She had said the system needed more than cosmetic change. That was refreshing.

In an industry that often hides structural problems behind jargon and incremental tweaks, very few leaders openly acknowledge that the model itself may need rethinking.

However, I had also expressed reservations when WPP brought in McKinsey & Company to “fix the future.” My concern was not about the competence of consultants. It was about the nature of creativity itself. You cannot audit your way to creativity. You cannot process map your way into the limbic brain of people, clients or consumers.

Creativity lives in tension, dissent, rebellion and intuition. No consulting framework can fully capture that. My suggestion then was simple, if creative companies want to reinvent themselves, the answer lies within their own culture.

Identify the rebels. Encourage the dissenters. Give non-conformists the space to experiment with new models of working. Let them build prototypes. If something works, scale it.

Creative revolutions rarely come from committees. They come from small insurgent pockets inside organisations.

A bold move : Outcome based remuneration

Which is why WPP’s recent decision to move toward outcome based remuneration, away from the traditional time and materials agency model, is both bold and welcome. For decades, agencies have been paid largely on inputs, number of people deployed, hours billed and deliverables produced. Outcome-based remuneration attempts to flip that equation.

Pay the agency based on the results delivered. Conceptually, it aligns incentives between client and agency. It also acknowledges a reality the industry has long avoided confronting,  the traditional agency compensation model is structurally broken.

For many years, through my writings and speaking engagements, I have argued that the ecosystem requires structural change, not cosmetic repair. So in principle, this shift is something I wholeheartedly welcome.

But as someone who believes in the idea, I must also play the devil’s advocate. Because the ecosystem, particularly in markets like India, may not yet be mature enough to fully embrace it. Which is precisely why I had earlier recommended a prototype approach.

Start with prototypes, not universal rollouts

Rather than attempting to transform the entire industry overnight, WPP should begin by experimenting with three types of clients:

1. Large global MNCs : Mature organisations that invest significantly in marketing and operate with structured data systems.
2. Ambitious Indian promoter-led companies : Medium to large businesses with global aspirations and decision making agility.
3. New age DTC companies: Digitally native organisations comfortable with experimentation and performance linked models.

If the model succeeds with these groups, it can then be scaled. This is not caution born out of scepticism. It is caution born out of structural realities. I will explain why the ecosystem isn’t fully ready yet

1. The arbitrage reality

Recently, we saw a whistleblower case involving a large agency group where an ex-employee alleged that the agency generated arbitrage income on media deals beyond client remuneration. Let us be honest. Various forms of arbitrage have long been a pillar of agency revenue.

The other side of that truth is equally real: agencies have also been pushed relentlessly on fees by procurement teams, often squeezed down to the last penny.

But if local agency CEOs are evaluated on bottom line performance, it is unrealistic to assume they will voluntarily shut down alternative revenue streams overnight.

Structural incentives rarely disappear because a policy document changes.

2. The procurement question

Outcome based remuneration fundamentally changes the role of procurement. Procurement teams are designed to negotiate predictable costs. Outcome models introduce variable, potentially unpredictable remuneration. This raises uncomfortable questions:

• Will procurement teams accept variable fee structures?
• How will they evaluate predictive models?
• Who validates the assumptions that define success?

For procurement, this represents not just a pricing change, but a philosophical shift.

3. The data fragmentation problem

Outcome models rely on robust measurement. But advertising still operates in a fragmented data ecosystem. There is:

• No single-source audience measurement
• Limited transparency from closed platforms
• Fragmented consumer journeys

Consider a simple example. An advertiser runs a campaign and sends thousands of potential buyers to an e-commerce platform. What happens inside that platform’s ecosystem is largely invisible. Did the lead convert? Did the platform prioritise another seller? Was pricing changed? Without transparency, how do we determine outcomes?

4. Margin pressures on advertisers

Many advertisers today operate on extremely thin margins, particularly on large digital platforms. When margins are already compressed, marketers may find safety in predictable fixed agency fees rather than variable remuneration tied to outcomes. From their perspective, the question becomes, why add another layer of uncertainty?

5. The attribution puzzle

Since the rise of digital marketing, attribution has been the industry’s holy grail. But we still do not have definitive answers.

Historically, research during the era of mass media suggested that only about 18% of advertising spend could be directly attributed to sales, while the rest contributed to factors like brand building and long term equity. Today we talk about:

• Top funnel
• Mid funnel
• Bottom funnel

But the real question remains unresolved, How do these layers interact? Does top funnel brand investment influence bottom funnel conversion? Almost certainly yes. But how do we measure that precisely enough to determine agency remuneration?

6. The trust question

Perhaps the most fundamental issue, will clients share their real internal data with agencies? Outcome models require deep integration between advertiser and agency systems:

• Sales data
• CRM insights
• Distribution performance
• Customer behaviour

Without transparency, outcome based remuneration becomes little more than a theoretical construct.

Why this is still the right direction

Despite all these questions, I remain convinced that WPP is moving in the right direction. The traditional agency model,  built on time sheets and hourly billing, belongs to a different era.

Technology, AI and automation are rapidly making the input-based pricing model obsolete. Outcome based models represent a necessary evolution.

But evolution rarely happens through sudden revolutions. It spreads gradually.

The Diffusion of Innovation

This is where the Diffusion of Innovations theory becomes relevant. Every innovation moves through stages:

1. Innovators
2. Early adopters
3. Early majority
4. Late majority
5. Laggards

WPP does not need the entire industry to change overnight. It only needs to find the innovators and early adopters, the clients willing to experiment. If those early prototypes demonstrate success, the rest of the ecosystem will follow.

A necessary debate

This shift will invite resistance. Many agencies will oppose it quietly. Many clients will hesitate openly. Because it disrupts long-established economic structures across the industry. But the conversation itself is necessary. And that is why WPP deserves credit for initiating it.

A personal note

For a long time, through my articles and industry engagements, I have argued that the advertising ecosystem requires structural reinvention rather than cosmetic repair.

So while I may raise questions, many of them uncomfortable, they come from someone who genuinely believes in the direction of change.

If the industry begins experimenting with prototype models, I would be more than happy to contribute to that conversation.

Because if this transformation succeeds, it may finally move our industry from being paid for effort to being rewarded for impact.

And that would be a change worth waiting for.

Yesudas S Pillai | Advertising Veteran, Entrepreneur, Marathoner, Investor, Author, Speaker, Mentor and A Curious Observer