WPP to spend £300m over three years for restructuring
CEO Mark Read sets out a plan of “radical evolution” to deliver improved performance
Published - 11-December-2018
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%
He will report to Atin Wahal, Executive Vice-President and Head of BBDO’s Mumbai operations
Published - 1 hour ago
BBDO India has appointed Kunal Solanki as Vice-President for the Mumbai office. He will report to Atin Wahal, Executive Vice-President and Head of BBDO’s Mumbai operations.
Solanki began his career in advertising more than 18 years ago and joins us after 11 years working in the Middle East (Dubai). He has experience across various categories including Telecom, FMCG, Automobile, Banking, Electronics and Durables working on different brands such as Hutch & Vodafone, Marico, Sony, LG, Heinz, Kimberley Clark, Hyundai, Westside (TATA), Cox and Kings. Over the last few years, he has helped develop the digital arms of agencies in Dubai, with a focus on integration and content creation.
Speaking on his new role, Solanki said, “In this day and age, when consumers have so much content thrown at them, it is imperative that brands get the context right and present it in a way that the consumers can relate too. BBDO’s work over the years has done just that and this is what resonated with me. I am delighted to join the BBDO family and look forward to my journey ahead.”
Commenting on his appointment Atin Wahal said, “Kunal is a rare breed of advertising professional who understands the communication needs as well as the marketing problems for the clients. His experience with varied categories and regional exposure will surely be an asset for the agency. We welcome him to the ever-energised BBDO Ashram.”
The scope of the mandate will see Lowe Lintas conceive a sharp advertising campaign for Cricbuzz during the heavily anticipated Cricket World Cup
Cricbuzz has appointed Lowe Lintas to handle their creative duties ahead of the Cricket season. The scope of the mandate will see Lowe Lintas conceive a sharp advertising campaign for Cricbuzz during the heavily anticipated Cricket World Cup.
Thanks to the meteoric rise in the number of smartphone users, supported by falling costs of internet bandwidth in India, viewers will experience the game way beyond television sets this World Cup. Needless to mention, there is expected to be a surge in cricket-related content, in multiple formats - ranging from videos to blogs to memes. To thrive in the midst of a storm of similarly-themed content will be a challenge that a lot of brands are likely to face, the agency said in a statement.
Talking about the appointment, Ajith Ramamurthy, Business Head – Videos, Cricbuzz, said "Being the No. 1 cricketing platform in the world, it’s time for us to promote the latest offering from the brand. We were looking for a creative partner to deliver a high-impact campaign promoting the video content during the world cup and found an able partner in Lowe Lintas. We are excited about this partnership and look forward to working with the Lowe Lintas team."
With Lowe Lintas onboard, Cricbuzz aims to attract a lion's share of user attention for its video content uniquely crafted around the Cricket World Cup. In order to flick a Sixer, it will be prudent for Cricbuzz to grab considerable mindshare even outside the boundaries of a live cricket match.
Commenting on the win, Hari Krishnan, President, Lowe Lintas said, "What Cricbuzz has achieved already is quite amazing. It is India’s largest platform for everything cricket. The video content on Cricbuzz is far superior and insightful compared to what the viewer is used to. We are excited about this opportunity, being cricket buffs ourselves".
The Bangalore office of Lowe Lintas will handle the account.
The account will be handled by Dentsu Webchutney’s Bengaluru office
Dentsu Aegis network’s digital agency Dentsu Webchutney has won the social and digital mandate for Britannia Timepass, following a multi-agency pitch. The account will be handled out of their Bengaluru office.
Commenting on the development, Jayant Kapre, VP- Adjacencies Business, Britannia, said, “Taking forward our vision of being a ‘Total Foods Company’, we are entering the salted snack market for the very first time with Britannia Timepass. It’s a cluttered market, filled with players from both the organized and unorganized sectors. Our content needs to break through the digital noise. The need of the hour was to find a partner that not only shared our vision for the brand but would further it with their own thoughts, points of view and ideas.”
Prashant Gopalakrishnan, Sr. Vice President, Dentsu Webchutney, said, “We are talking about one of the most iconic companies this country has ever seen. The team is thrilled to partner with Britannia on this journey - one we hope is just the start of a longstanding relationship. The brand Timepass itself comes with tremendous inherent creative potential, and a client team that we already have built great synergies with.”
The agency will be focusing on delivering a brand new look to ETC’s social media
TheSmallBigIdea, the full servicing digital agency has won the social media mandate for ZEE ETC Bollywood. According to the mandate, the agency will be focusing on delivering a brand new look to ETC’s social media. Additionally, it’ll tap the youth and create content strategies that are highly engaging and relatable to the said audience. This, in turn, will take the digital community for the brand up a notch!
Speaking on the win TheSmallBigIdea’s COO, Manish Solanki said, “Having worked in the entertainment category, we understand the place Bollywood music holds in the rapidly growing entertainment industry. With ETC, we have a dual task marked out: to promote the Channel’s brisk and interesting content through digital endeavours, and to connect the Indian viewer to its youthful and entertaining programming.”
Shenoy had previously enjoyed a fruitful stint with Langoor, after which he was associated with WATConsult as their AVP for southern region
Published - 3 hours ago
Langoor, a full-service digital-first agency, has appointed Vijay Shenoy as Senior Vice President, Strategy and Business Development. Vijay Shenoy had previously enjoyed a fruitful stint with Langoor, after which he was associated with WATConsult as their AVP for southern region.
Shenoy brings with him more than 14 years of experience in the digital marketing industry – developing deep insights, building brands and understanding the art of decoding human behaviour, the agency said in a statement. During his earlier association with Langoor, Shenoy was responsible for new avenues of business growth, apart from leading their design and innovation practice. In his last stint with WATConsult, Shenoy spearheaded new business initiatives and managed existing client relationships including their strategy and delivery.
Speaking on Shenoy’s re-appointment, Venugopal Ganganna, CEO, Langoor, said “We are delighted to have Vijay back with us. He has been a pillar of the leadership team and we are confident that his deep understanding of Indian consumers and cultural insights will fuel our growth plans.”
Talking about his role, Shenoy, says, “It's great to be back home. Langoor team has always helped me identify my strengths and leverage them. The intersection of data, creativity and technology is what excites me, and I am looking forward to my second innings, to explore and be a part of our amazing growth journey.”
With its breadth of integrated capabilities, BBH India will lead Audi’s brand communications across mainline, experiential, activations, digital and social media
Published - 6 hours ago
Audi India announced the appointment of BBH as its lead agency in India, handling mainline and digital work. The appointment follows a multi-agency pitch which took place towards the end of 2018.
BBH and Audi’s global partnership goes back 37 years with the brand being BBH London’s founding client in 1982. The alliance has birthed the iconic ‘Vorsprung durch Technik’, a line and ethos that is still used today and sits at the heart of every piece of communication from the brand. In 2018, BBH London won the Grand Prix at IPA Effectiveness Awards for their work on the brand.
The appointment comes as Audi looks to its next phase of growth in India and is looking to their communications strategy to help fuel that growth. With its breadth of integrated capabilities, BBH India will lead Audi’s brand communications across mainline, experiential, activations, digital and social media. A multi-channel, multi-faceted, fully integrated mandate in its truest sense that will evolve in line with Audi’s India business.
Commenting on this occasion, Rahil Ansari, Head of Audi India said, “Audi is geared for an exciting year with a fantastic line-up of products and activities. While finding a partner, we were looking for someone that understands modern India and brings energy and disruptive thinking to the table. Audi and BBH have had a great partnership globally and the India team demonstrated a deep understanding of the local market and were able to translate that into exciting work across the consumer journey."
Russell, Barrett, Chief Creative Officer, BBH India added, “Audi is one of the founding clients of BBH. And the opportunity to create extraordinary stories, from the tiniest interaction to the final decision was something that genuinely excited us. We hope, along with Audi India, our bespoke, cross-functional, integrated team will help in crafting work throughout the customer journey. We look forward to a great partnership and the opportunity to bring to life the idea of progress through insightful stories and surprising technology.”
K Vijayakumar, MD & CEO of the company has resigned from the post with effect from March 31 but will continue as an Executive Director of the Board
Published - 2 days ago
South Indian media giant, Sun TV Network, filed with the exchanges that the Board of Directors of the company announced the appointment of R Mahesh Kumar as an Additional Director as well as Managing Director, Kaviya Kalanithi Maran as Additional Director and Executive Director, Sridhar Venkatesh and Desmond Hemanth Theodore as Additional Directors (Independent) with effect from April 1, 2019.
The appointments will last for a period of five years, and is subject to the approval of shareholders of the company through postal ballot.
Maran is the daughter of promoter Kalanithi Maran, this marks the entry of one more next gen entrepreneur into the industry.
K Vijayakumar, the Managing Director and Chief Executive Officer of the company has resigned from the post with effect from March 31, 2019 but will continue as an Executive Director of the Board.
YuppTV will broadcast to all its existing & new users in Australia, Continental Europe, Singapore, Malaysia, Sri Lanka & RoW including South & Central America & Central & Southeast Asia
YuppTV, the OTT platform for South-Asian content, has acquired the digital broadcasting rights for Vivo IPL 2019 outside of India. With this development, cricket fans across the globe can catch all the action of Season 12 of the world’s biggest T20 tournament, right as it unfolds.
YuppTV is bringing the highly engaging action to all of its existing and new users in Australia, Continental Europe, Singapore, Malaysia, Sri Lanka and RoW including South & Central America and Central & Southeast Asia.
Commenting on the announcement, Uday Reddy, Founder & CEO, YuppTV, said, “We are glad to acquire the digital broadcasting rights for the IPL 2019 and would be enabling on-the-go-access to all the action unfolding in the Season 12 of IPL. We are determined to provide our global audience with convenient and real-time access to their favorite sporting action, through a wide gamut of internet-enabled devices.”
As one of the biggest and most-awaited cricketing extravaganzas, Season 12 of Indian Premier League will finally hit the stands on March 23. Promising an enthralling season, the 8 teams will be headed against each other in a total of 60 matches. The season will open with the defending champions, Chennai Super Kings taking on Royal Challenger Bangalore.
Cricket fans in Australia, Continental Europe, Singapore, Malaysia, Sri Lanka and RoW including South & Central America and Central & Southeast Asia can catch all the action from IPL 2019 on YuppTV. The may log on to the website or access the same via the YuppTV app.
The brand is founded and run by brothers and entrepreneurs M. Yeshwanth Nag & Ashwin Mocherla
The ThickShake Factory, India’s first premium milkshake brand is one of the most awarded & fastest growing shakes brands in the country, having 105 outlets currently operational in 26 cities including one in the US. The QSR chain specializing in retailing shakes had its 1st advisory board meeting at the ITC Maratha, Mumbai. The brand is founded and run by brothers and entrepreneurs M. Yeshwanth Nag & Ashwin Mocherla.
The advisory board of The ThickShake Factory comprising of a stellar panel of industry stalwarts is headed by serial entrepreneur Dr. Anurag Batra, chairman of BW Business World and founder of media group Exchange4Media. The advisory board consists of mavericks like Dr. Velumani Arokiaswamy, the founder of the Rs 3000 crore valued healthcare Thyrocare, Jayant Kocchar the ex MD, Founder of Lacoste India, Barista, India’s 1st Coffee Café chain, Sagar Daryani of Wow! Momo, Srinath Sridharan, the head of GroupChairman’s office of Wadhawan Global Capital, which manages $22 billion in assets, Rohit Bayana Co-founder of Lumis Partners, a Private equity fund and Preeti Vyas Chairwoman &founder of VGC - one of India’s top design agencies.
“We are having the vision to build a large consumer brand in the foodservice sector and are aiming at doubling our stores and revenues this financial year. This board meeting provided an excellent platform to discuss the strategic direction of the company in our segment”, says Ashwin Mocherla.
The food tech and the QSR sector has increasingly seen rising investor interest off late with multiple deals happening in this space. Backed by the trust and confidence expressed by the stalwarts of the industry, we can surely expect the brand to shake things up in the coming months!
Under the mandate, Social Kinnect will be responsible for carving a social media roadmap for both the brands across creative, media and ORM-led services
Social Kinnect has won the digital mandate for Raymond Custom Tailoring and Raymond Rewards, an offering custom-tailored to ensure a unique bespoke experience. The mandate was won following a multi-agency pitch and will be operated out of the agency’s Mumbai office.
Under the mandate, Social Kinnect, the independent digital marketing agency, will be responsible for carving a social media roadmap for both the brands across creative, media and ORM-led services.
Established as a pioneer of premium clothing for occasion wear, Raymond introduced Raymond Custom Tailoring to provide customised clothing with a sense of personal style. Taking ‘perfect fits’ very seriously, Raymond Custom Tailoring offers garments that are crafted just for you. Currently available in four cities including Mumbai, Pune, Hyderabad, and Bangalore, Raymond Custom Tailoring aims to expand its services rapidly across the country within the year using digital as a medium.
Alongside custom tailoring, Raymond also offers Raymond Rewards - a loyalty program that lets you earn and redeem points across stores in India under the brand names of ColorPlus, Parx, Park Avenue and Raymond.
Commenting on the appointment of a new agency, Sudhanshu Pokhriyal, President, Textiles, Raymond Limited said, “In today’s internet consuming world, digital marketing is critical to bring in eyeballs and subsequent conversions for any business. We were looking for a partner to help us on this journey of redefining men’s fashion through Mass Personalization that is technologically enabled. Getting Social Kinnect on board, who bring in a gamut of new ideas and concepts, will help us in achieving our set objectives through innovative digital marketing ideas and help us build robust ORM platform.”
Rohan Mehta, CEO, Social Kinnect added, “Raymond is one of the first brands any Indian associates with well-made and timeless men’s clothing. Raymond Custom Tailoring brings the brand into the new-age, to appeal to younger consumers who crave customisation, bespoke clothing and are well-versed in digital. We are so excited to handle the digital mandate for such an iconic brand, and help it scale new heights of success in 2019 and beyond.”