In a nod to the impact of a “post-Publicis Omnicom Group world,” WPP this morning said it is accelerating its strategic focus on “fast growth markets” and “new media” to represent 40% to 45% of its business over the next five years. That’s an increase of 5% from its previous goals.
“We still intend to grow faster than the industry average, but without sacrificing operating margin or operating margin expansion,” the company disclosed in a first-half earnings report released early this morning. The statement said its growth would come from a combination of acquisitions and improvements in its “back-office” systems and infrastructure.
Explicitly, WPP acknowledged the need to comment on PubliCom’s “recent big, bold, surprising, move,” noting: “Whilst we have consistently predicted further consolidation in our industry, it is true to say that the scale of the latest move caught us by surprise, at least before 18 July, although whether such a move, if implemented, proves to be successful remains to be seen.”
The statement groused that the merger appears to run “counter to the strategies and cultures of both parties,” its structure and organization are “clunky,” the potential client and staff fallout are “considerable,” and the regulator issues surrounding the merger are “significant.”
“If that was not enough, we have consistently said that with the exception of media-buying there are diseconomies of scale in creative industries, that have to be managed carefully,” WPP said, concluding that a “post-POG world” would be “at worst neutral and at best highly positive” for the rest of the ad industry because of the effects of consolidation and concentration of Madison Avenue clout.
“What does it mean for our strategy” WPP concluded. “Simply -- more and faster. It just underlines how important it is for us to deliver focused client benefits in fast growing markets, in new media, in data investment management and the application of technology and in horizontality. To underline the importance of these strategies and their client centricity, we are raising each of our fast growth market and new media sector targets from 35-40% of total revenues to 40-45% each, over the next five years i.e. by 2018. Again, a reinforcement of the same strategy, but more and faster, as we have already started to implement.”