• by Steve McClellan , September 4, 2018

Newly anointed WPP CEO Mark Read told financial analysts Tuesday that the company is conducting a comprehensive strategic review in order to reposition the firm to drive future growth. 

Read made his comments at a presentation in London where the company reviewed first-half financial highlights that included -- for the first time in over a year -- modest organic growth. 

Read noted that he has been busy meeting with clients over the past five months and that while they say they “value what we do,” there is some “frustration” that the holding company isn’t working quickly enough to simplify its structure so that clients can better understand and access more easily all of the resources available to them via the holding company. 

“We have the capabilities,” said Read, who was appointed CEO on Monday after serving as co-chief operating officer since the departure of former CEO Martin Sorrell in April. “It’s really about connecting them. There are many things to do differently and better across the group.” 

The results of the review will be disclosed in December when the company expects to reveal a repositioning strategy and plans for improving under-performing assets like Kantar and a number of the company’s creative agencies. 

There has been some improvement in recent months, Read asserted, citing the organic growth improvement as well as the fact that WPP has won six of eight major new business pitches this year and three of four reviews where the company retained a major piece of business. 

Part of the reason for that success, Read said, is that agencies within the organization are cooperating better to present clients with integrated offerings. The company believes more progress on that front can be achieved by co-locating agencies in updated facilities, as it has done recently in New York, Toronto and other locales. 

Country managers will also play a more vital role going forward, Read noted, citing Portugal as an example that serves as a blueprint for future change. He noted that until recently the holding company had something like 30 different WPP agencies scattered in various offices. Now they are all housed in one building, communicating and cooperating more closely. “It adds strength and power to the group,” he said. 

Some immediate priorities include a detailed review of creative agencies and the insights business (anchored by Kantar), which have come under a lot of pressure in recent years and devising a plan for improving growth in both divisions. Read noted that WPP has not ruled out operating Kantar in some form of “partnership” with an outside firm to unleash its full potential, although no decisions have been made yet. 

By region, North America is the weakest performer right now, and fixing that situation is a top priority, said Read. 

He acknowledged that the in-house trend is growing, but added that “I don’t think clients want to do it” without help from the outside. “For some it will be a blend.” 

In a note to investors, Pivotal Research senior analyst Brian Wieser wrote that the strategic review “should present an opportunity for transformation of WPP.” 

At the same time, Wieser added, “we think the company has the bulk of the assets, geographic presence and client relationships that it needs to return to revenue and margin growth. Changes seem inevitable, with fewer agency brands, for example, and some kind of change to the way in which Kantar is situated within WPP seems likely too, especially considering the expected auction for Kantar’s direct competitor Nielsen.” 

However, Wieser surmised, “we think that growth will mostly be a function of execution in adapting to evolving client needs with investments around internal and external e-commerce, data and consumer experience-focused capabilities. We think it is particularly positive for WPP that its new CEO has extensive experience in these areas, which should be helpful for the company as it evolves going forward.”