WPP to spend £300m over three years for restructuring
CEO Mark Read sets out a plan of “radical evolution” to deliver improved performance
WPP has announced the results of its strategic review, setting out a new plan to return the business to grow. The strategy reflects a new vision for WPP as a leader in creativity and technology. It incorporates a simpler, improved offer designed to capture the opportunities of a changing marketplace, and a streamlined structure built around the needs of clients. It also includes additional investments in creativity, technology and talent to enhance WPP’s proposition to clients and drive top-line growth.
WPP expects to deliver organic growth (defined as like-for-like revenue less pass-through costs growth) in line with its peers at a headline operating profit margin (excluding associates) of at least 15% by the end of 2021 as a result of the strategy. The company will incur cash costs for restructuring of £300m over the next three years to deliver estimated annual savings of £275m by the end of 2021, approximately half of which will be reinvested in the business.
Speaking about the announcement, Mark Read, Chief Executive Officer of WPP, said “What we hear from clients is very consistent: they want our creativity, and they want us to help them transform their business in a world reshaped by technology. This is at the heart of what we do. “We are fundamentally repositioning WPP as a creative transformation company with a simpler offer that allows us to meet the present and future needs of clients. This more contemporary proposition has already helped us to win new business, including Volkswagen’s creative account in North America."
He continued, “The restructuring of our business will enable increased investment in creativity, technology and talent, enhancing our capabilities in the categories with the greatest potential for future growth. As well as improving our offer and creating opportunities for clients, this investment will drive sustainable, profitable growth for our shareholders."
“We describe our approach as ‘radical evolution’: radical because we are taking decisive action and implementing major change; evolution because we will achieve this while respecting the things that make WPP the great company it is today" he added.
WPP is hosting a presentation for investors and analysts at its new headquarters in London.
Key points of the presentation, which will also be webcast, include:
Opportunities in a Changing Industry
Technology is rapidly reshaping our sector, presenting challenges but also opportunities. We believe the industry is facing structural change not structural decline. WPP is adapting at speed to capture these opportunities and to become even more client-centric than it is today.
Vision, Purpose and Identity
WPP’s vision is to be a creative transformation company, bringing together creativity and expertise in technology and data – with the purpose of building better futures for its people and clients. This competitive positioning was developed in consultation with our people and clients, and is supported by a refreshed brand identity created by WPP agencies Superunion and Landor.
Simpler, Improved Offer
WPP’s future offer will cover four areas: communications, experience, commerce and technology. Each of these areas is critical to success for modern clients, and by bringing them together the company will better serve clients’ needs as they react to the changing marketplace, and expand WPP’s own business in high-growth sectors.
• Communications focuses on advertising, content, media, public relations and public affairs, and healthcare.
• Experience reflects the growing need of clients to create a new brand, product and service experiences.
• Commerce allows WPP to expand its growing omnichannel commerce business and its work with brands to help them succeed in marketplaces such as Alibaba and Amazon.
• Technology underpins WPP’s work with both CMOs and CIOs to build and operate marketing technology that supports their consumer- and customer-facing activities.
The areas of experience, commerce and technology already represent approximately one-quarter of WPP’s revenue.
A Renewed Commitment to Creativity
WPP’s most important competitive advantage is its creativity. It is what makes WPP special and what differentiates it from other professional services firms. WPP has significant creative strengths, having won the “Holding Company of the Year” award at the Cannes Lions International Festival of Creativity for seven consecutive years between 2011 and 2017 – but the business must invest more in this area. As part of this strategic review, WPP is making a renewed commitment to creativity, investing an incremental £15m a year for the next three years in creative leadership, with a particular focus on the United States.
Technology, Data, Partners and Platforms
Alongside creativity, the company will accelerate and promote its technology and data capabilities as clear sources of competitive advantage to WPP. They will follow a consistent approach across WPP by adopting a common technology strategy, leveraging the strengths of our unique technology partnerships, and making our significant existing capabilities in marketing and advertising technology available to all WPP companies for the benefit of our clients.
WPP has become too unwieldy, with too much duplication. As a result, it is not always as focused or as a fleet of foot as it needs to be to satisfy the needs of clients around the globe. Therefore, central to the new strategy is a simpler structure, built around the needs of clients, to allow easier access to WPP’s many resources. The structure is based on three principles:
• Clients: we will become a more client-centric organisation in order to deliver the best of WPP.
• Companies: we will have fewer, more integrated companies equipped to adapt to a changing market.
• Countries: we will integrate further at a country level to leverage our strengths in individual markets.
As previously announced, the Board of WPP has decided to develop Kantar with a potential strategic or financial partner, with WPP retaining a significant minority interest and strategic links with Kantar. Proposals will be evaluated on their financial and strategic benefits and if a transaction is agreed it is likely to be announced in the second quarter of 2019. Preparations are well underway and we have received numerous unsolicited expressions of interest.
Leadership, Talent and Culture
For the first time, WPP has established an Executive Committee drawn from both corporate and company leadership. This Executive Committee will work together to implement the new plan, and we will review the company’s incentive arrangements to align with the strategy. To make WPP the natural home for the best and brightest, and to attract the next generation of talent, we will champion a culture across WPP characterized by the values of openness, optimism and a commitment to extraordinary work.
Progress to Date:
Since April this year, the company has made consistent progress towards our goals. This includes the creation of the integrated networks VMLY&R and Wunderman Thompson; the alignment of our US healthcare agencies with integrated agency partners; and the elimination of the sub-holding company WPP Health & Wellness. VML, Y&R, Wunderman, J. Walter Thompson and WPP Health & Wellness collectively account for 23% of WPP revenue. WPP has also disposed of 16 non-core investments and associates, raising £704m to reduce our debt.
2018 and 2019 Outlook:
WPP anticipates reporting full-year results in line with consensus expectations, with full-year like-for-like revenue less pass-through costs growth now expected to be closer to -0.5%. The company is beginning a multi-year improvement programme and 2019 will be a year of investment in the business with the execution of our cost-savings programme and further actions taken to return the company to long-term sustainable growth.
Previously announced account losses will create the anticipated headwind, particularly in the first half of the year.
Restructuring and Investment:
The company will incur cash costs for of £300m restructuring over the next three years, reflecting actions to position the company for growth, address under-performing units and streamline our operations. The actions include:
• The integration of VML and Y&R, and Wunderman and J. Walter Thompson.
• Right-sizing and disposal of under-performing businesses.
• Closure of unsustainable operations.
• Further development of Campus co-locations.
• Establishing a consistent, shared service infrastructure to support 30 countries over the next five years.
The annual savings from the actions are anticipated to be £275m by the end of 2021. WPP will reinvest approximately half of these savings into 2019 to 2021.
Future Capital Allocation Policy
The company has made good progress on its divestment of non-core assets, raising £704m from 16 disposals to date. We continue to target a reduction in average net debt to EBITDA ratio to within our revised target range of 1.50-1.75x by 2021. Over the next three years, WPP will prioritise the dividend over share buy-backs and will balance targeted M&A with divestments. The Board anticipates declaring a final dividend of 37.3p at the Preliminary Results to deliver a full-year dividend for the current financial year of 60p which it intends to maintain.
Medium-Term Financial Targets
As part of the strategic review, WPP has set out new medium-term financial targets that will allow the company to invest in talent and technology, improve its competitive position and deliver sustainable long-term growth rates. These are as follows, to be achieved by the end of 2021:
• Organic growth (defined as like-for-like revenue less pass-through costs growth) in line with peers
• Headline operating profit margin (excluding associates) of at least 15%
• Free cash flow conversion1 of 80%-90%
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The VC co-founded by Iyer, Raja Ganapathy ex-Chief of Marketing of Sequoia India and former DDB Mudra Group CEO Vineet Gupta, will provide capital and consultancy service to technology start-ups
Former Lowe Lintas Chairman and CCO, Arun Iyer has teamed up with Raja Ganapathy, former Chief of Marketing of Sequoia India and former DDB Mudra Group CEO Vineet Gupta to launch their own Venture Capital, Spring Marketing Capital, according to news reports.
This development adds to the growing trend of top executives branching out to start their own ventures. According to reports, the VC will provide capital and consultancy services in the areas of marketing and branding to new technology start-ups. It is believed that Spring Marketing Capital already has several assignments including from Healthkart and BYJUs.
The fund has a target corpus of $30 million, which it plans to invest across five to seven startups every year under ticket sizes ranging from $1-2 million. Ganapathy's team is believed to have already had the backing of several investors and is at the advanced stage of finalising LLPs. The VC is expected to close $20 million by June 2019.
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Sawney will replace the incumbent David Richardson, who will be stepping down after the World Cup in July
Manu Sawhney has been appointed as the new Chief Executive Officer of the International Cricket Council. Sawney will replace the incumbent David Richardson, who will be stepping down after the World Cup, according to reports.
According to a statement by the ICC, Sawhney, the former CEO of Singapore Sports Hub and Managing Director of ESPN Star Sports, will join the organisation next month before formally stepping into Richardson's role in July.
Sawney's appointment was confirmed following a global search and appointment process headed by ICC Chairman Shashank Manohar and the Nominations Committee.
In his 17 years with ESPN Star Sports as Managing Director, Sawhney was responsible for driving the business and growing revenue. In addition to this, he was instrumental in the global broadcast partnership deal with the ICC that ran from 2007-2015. He is also a non-executive director and member of the Audit Committee of Manchester United Ltd.
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The rebranding follows the February 2018 merger of Burson-Marsteller and Cohn & Wolfe to form BCW (Burson Cohn & Wolfe)
Genesis Burson-Marsteller in India has announced its formal rebranding as Genesis BCW, effective immediately. The rebranding follows the February 2018 merger of Burson-Marsteller and Cohn & Wolfe to form BCW (Burson Cohn & Wolfe), one of the world’s largest, full-service, global communications agencies.
“We are excited to take on the BCW brand proposition as part of our new identity,” said Prema Sagar, Chief Executive Officer & Founder, Genesis BCW. “The respect, credibility, and leadership that brand Genesis has established in India will only grow further with the vision, energy and fresh offerings of BCW. We are incredibly excited about this next chapter.”
Founded in 1992 by Sagar, the 26-year journey of Genesis mirrors that of the public relations industry in India and tells a story of constantly pushing boundaries. Genesis has given the Indian industry some of its firsts: It was the first to develop proprietary tools for reputation management, the first to create and put into practice service quality measurements, the first to use technology and, more recently, the first to develop the one-of-its-kind Live! Newsroom. In 2005, Genesis PR became part of the Burson-Marsteller global network under the WPP Group and was rebranded Genesis Burson-Marsteller.
Genesis BCW will continue to be led by Sagar along with newly appointed Managing Director Deepshikha Dharmaraj. Together with the other members of the India Management Team, they will ensure continuity and excellence in the firm’s engagements with its clients, people, industry and community.
“In India, the Genesis brand is synonymous with PR excellence and as an employer of choice for up and coming communicators. The brand will continue to thrive and resonate in our industry as Genesis BCW,” said Matt Stafford, President, Asia-Pacific, BCW, to whom Sagar reports. “Our India team is on a roll. The end of year financial results for 2018 have just been finalized and Genesis BCW achieved its highest annual revenue growth in its 26 years of existence.”
BCW combines Cohn & Wolfe’s expertise in digitally-driven, creative content and integrated communications – across the consumer, healthcare and technology sectors – with Burson-Marsteller’s strength in public affairs, corporate and crisis management, technology and research.
A separate announcement on the formal rebranding of Cohn & Wolfe Six Degrees as Six Degrees BCW will be made soon.
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Dabral along with Reed Collins will lead Ogilvy's creative teams in Asia. This follows the exit of regional chief creative officer APAC Eugene Cheong
Ogilvy has appointed Sonal Dabral and Reed Collins to lead its creative teams in Asia, as per industry sources. This rejig in leadership follows the exit of regional chief creative officer APAC Eugene Cheong. An official announcement of the same is awaited.
Dabral joined Ogilvy India from DDB in 2017 as group chief creative officer and vice chairman. In his new role he will oversee South and Southeast Asia, while Collins will continue to be responsible for North Asia. Dabral has worked extensively in Asia serving in leadership positions at Ogilvy Kuala Lumpur, Ogilvy Singapore, and Bates Asia-Pacific.
In the past Dabral has worked closely with Piyush Pandey who is now the global CCO for Ogilvy. Both Pandey and Dabral will be based out of India.
Pandey took charge as global CCO of Ogilvy on January 1 2019.
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His previous stint was with Star Sports where he developed marketing and media strategy
Kartik Mahadev has joined ZEE Entertainment Enterprises Ltd (ZEEL) as Marketing Head - English Cluster.
He will report to Prathyusha Agarwal, CMO, ZEEL and Shaurya Mehta, Business Cluster Head – Premium channels, ZEEL.
Mahadev joins ZEEL from Star Sports where he was the VP, Head of Marketing - Star Sports. At Star, he developed marketing and media strategy for brand ‘Star Sports’ and drove business outcomes for the premium sports business. He also launched the premium movies channel Star Gold SELECT.
Mahadev started his career at Cadbury India, now Mondelez India, as an intern. He spent over 12 years there, where as Project Lead and Senior Brand Manager collaborated with AP regional and global category cross-functional experts towards end-to-end product development, design, and launch of a 'new to world' brand - Cadbury Bournvita Biscuits in India.
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The account will be handled from Publicis India's Mumbai office
Leading online pharmacy, Netmeds.com has appointed Publicis India to manage its creative duties. The agency was shortlisted after a multi-agency pitch and was chosen for presenting a sharp consumer-focused communication plan that was in sync with what the brand had envisioned for the Indian market. The account will be managed by the Mumbai office of Publicis India.
Commenting on the win, Pradeep Dadha, Founder & CEO of Netmeds.com said: “For us at Netmeds.com, the health of the nation is a priority, and we are working towards ensuring that every Indian has access to affordable and good quality medicines, no matter which part of the country they are in. We believe that our association with Publicis India is a key step towards helping us reach that goal with the right communication. With Netmeds Cup at the offing, we have started 2019 on high note and will continue to create new milestones with our creative collaboration with Publicis India.”
Adding his views, Suraj Pombra, Executive Vice President, Publicis Capital said: “Netmeds.com comes from a legacy of 100+ years of healthcare. In keeping with evolving consumer needs and leveraging the power of technology & modern logistics, Netmeds.com continues its tradition of serving the nation’s healthcare requirements. We at Publicis India feel honoured to have been chosen by Netmeds.com as their partner through the next part of their journey. The online pharmacy market is seeing increasing action and the category landscape is fast changing - we will be working with what is a fantastic client team through the challenges ahead to help Netmeds.com lead the change.”
Netmeds.com is a fully licensed e-pharma portal that offers authenticated prescription and Over the Counter (OTC) medicine along with other health products. Netmeds is the “first-to-market” to offer a pan-India solution for the quick online purchase and fast delivery of prescription medications and has served more than 3,700,000 customers in more than 610 cities and towns.
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Amar Nagaram has been named as Head, Myntra and Jabong, and will report to Flipkart's Group CEO, Kalyan Krishnamurthy
Flipkart-owned fashion retailer Myntra CEO Ananth Narayanan has quit, a development that ends months of speculation about his exit following a recent re-jig at its parent group.
In a statement, Myntra said Narayanan has decided to step down as CEO of Myntra and Jabong to pursue external opportunities. Amar Nagaram has been named as Head, Myntra and Jabong, and will report to Flipkart Group CEO Kalyan Krishnamurthy.
There were speculations that Narayanan would quit after a new reporting structure was put in place when Binny Bansal, the then CEO at Flipkart Group (which owns Myntra and Jabong), quit the company.
As a part of the new structure, Myntra and Jabong were brought under Flipkart, with Narayanan reporting to Krishnamurthy.
"Ananth has played an important role in making Myntra and Jabong into a formidable player in the fashion e-commerce market and steering the company towards sustainable growth," Myntra said in a statement.
It added that over the last three and a half years, Narayanan and the management team have built a strong foundation for the company. "Myntra and Jabong are an important part of the Flipkart group serving our valuable customers. The company will continue to execute the growth strategy and leverage synergies with Flipkart as appropriate," it said.
The strong bench strength and new leadership at Myntra and Jabong will allow the business to continue on its strong and sustainable growth trajectory, the statement added. Nagaram, who recently moved to Myntra from Flipkart, has been working with the group for around seven years.
"Nagaram has played a pivotal role in making shopping accessible, delightful and affordable on every connected device. Most notably, he led the efforts on revisiting the boundaries of mobile web, making the experience on it as good as native," the statement said.
As per media reports Narayanan is speculated to be the next chief of streaming platform Hotstar.
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Tiwari was behind the successful moment marketing initiative during Kerala floods, which was appreciated by the likes of Shashi Tharoor and went on to become Twitter moment
The Head of Digital Marketing & PR at Hero Cycles, Ashish Tiwari, has called it quits.
At Hero Cycles, Tiwari led the digital marketing & PR team for the last two years. Since July 2017, he was headhunted as part of the Executive Office to lead and envision a comprehensive digital transformation strategy for the entire HMC, a Hero Motors Company group, and was involved in planning and executing seamless change management across various global geographies working closely with multiple strategic business heads. It is not known as to where Tiwari is headed.
During his tenure, Hero Cycles saw the launch of corporate identity - HMC, a new consumer friendly website and apps. He was also behind one of the most successful moment marketing initiative during Kerala floods, which was appreciated by the likes of Shashi Tharoor and went on becoming Twitter moment.
Prior to this, he was Senior Manager – Digital Marketing and CRM for Jubilant Agri and Consumer Products where he was credited with proactively planning and implementing best-use practices in marketing communications across mediums – trade, digital, mobile, ATL and BTL to deliver 35 per cent augment in sales volume.
Equipped with a Post Graduate Degree in Business Management combined with a digital and social media specialisation from IIM, Bangalore. He has been associated with Vodafone India and HCL Infosystems managing brand communications and product/consumer marketing, evangelising new media as the key driver of growth.
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He takes on this role from Virat Tandon, who was recently elevated to the position of Group CEO, MullenLowe Lintas Group
Mullen Lintas has announced the appointment of Vikas Mehta as its CEO. Mullen Lintas is the creative agency of MullenLowe Lintas Group, built on the global network’s philosophy of challenger thinking with offices in Mumbai, Delhi (NCR) and Bengaluru. He takes on this role from Virat Tandon, who was recently elevated to the position of Group CEO, MullenLowe Lintas Group.
Speaking of the choice, Virat says, "Mullen Lintas has very quickly earned the reputation of being a high achieving agency. There couldn’t be a better person than Vikas to lead the agency into its next phase of growth. He brings with him a hunger to build the agency of the future and has the skills needed to do so. His experience as an omni-channel practitioner will give an edge to the solutions that the agency develops. I am sure that under his leadership, Mullen Lintas will only up its challenger game”. Formed a little over three years ago, Mullen Lintas features amongst the top ten creative agencies in India with some iconic campaigns under its belt. The agency has partnered numerous brands on a client portfolio that includes like Bajaj Auto, Bajaj Corp., Dabur, Fossil, Gionee, Havells, Honda, Modern Foods, Motilal Oswal, Oppo, Pharmeasy, Quikr, SBI Life Insurance, Tata Cliq, Tata Tea, Too Yumm, Viacom 18, Vistara, Vivo and Voonik.
In a career spanning nearly two decades, Vikas has spent over twelve years with the global MullenLowe Group, working in multiple countries across the Asia-Pacific region. Having moved to India in 2013, he has played several roles at MullenLowe Lintas Group including Group CMO, Head of Digital and President – Group Marketing Services. His last assignment was to set up the omni-channel creative agency, PointNine Lintas, which he ran as CEO until its merger with Lowe Lintas, announced last week.
Commenting on the move, Vikas says, “Mullen Lintas has achieved in three years what most agencies would dream of in a decade. Its founding leaders – Amer, Virat and Shriram – have built an agency where the leadership pedigree of Lintas, meets the challenger mindset of MullenLowe Group. It’s a culture of creative excellence, that punches way above its weight. I am delighted at the opportunity to help author the next chapter in the agency’s evolution.”
Speaking on Mehta’s appointment, Amer Jaleel, Group CCO and Chairman, MullenLowe Lintas Group said, “Mullen Lintas is a special agency. Handcrafted over the last 3 years, it needs nurturing and attention of a very different level to take it ahead from here. The agency has been the fastest to make it to the top 10 league in reputation ever and its ambition is to reach the 100-crore club too, faster than any other. In Vikas we found a partner to strengthen our already formidable team. Vikas brings so many colours to this role – he’s been a terrific believer and marketer of our name and fame, he’s shepherded PointNine Lintas back into the fold and he is probably visioning the future better than anyone in the industry. We are supremely fortunate to have him.’ Vikas will operate out of the Mumbai office of Mullen Lintas, and the appointment is effective immediately.
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This is Bamzai's first stint in the wire services; he has previously worked in magazines, newspapers, TV and digital
For senior journalist Sandeep Bamzai the year 2019 started on a great note as he joins IANS as CEO and Editor-in-chief. “My domain expertise is both on the revenue side and editorial side. And it is an extension of my last two jobs, in Mail Today I was the Profit Centre Head and in Financial Chronicle I was the Chief Operating Officer and Editor-in-Chief,” Bamzai told exchange4media.
An elated Bamzai informed, “This is a first stint in wire services for me. I have worked in magazines, newspapers, TV and even digital. So, it’s a new experience, I did a town hall meeting at IANS recently and I told them that content is the only differentiator and we have to produce original content, and only then we can get prominence across various platforms.”
Bamzai is also working on his fourth book. “My fourth book will be out in July or August. The book titled, Map Makers, is based on Jawaharlal Nehru, Vallabhbhai Patel and Lord Mountbatten who actually foiled the Indian princess and created the union of India as we know of now. The book will be published by Rupa and company. I have also been commissioned by Pramod Kapoor of Roli Books for my fifth book, which will see the light of the day later this year or by 2020, which is a pictorial history of Kashmir.”
Anjali reports on the advertising, digital and marketing domain. A graduate from Miranda House, Delhi University, she aspire to travel the world with her little salary. A big time Nutella and Netflix addict.