Cindy Rose.
The appointment of Cindy Rose, who comes from the tech sector rather than agencies, as CEO of WPP is recognition that the advertising group needs a dramatic shake-up, according to an article in The Times of London.
The newspaper's article, Can AI and Cindy Rose save ailing WPP?, points to the UK’s largest advertising group market value shrinking to £3.9 billion from £24 billion in 2017.
And analysts forecast the company will later this week announce a 5.5% drop in organic revenue growth for the September quarter.
WPP has shed thousands of staff, mainly in its media business, and slashed bonuses as the global advertising group deals with reduced client spend and slower new business.
The company has started a strategy review.
The Times quoted Adrien de Saint Hilaire of Bank of America as saying it’s not quite clear what WPP's point of strength or unique selling proposition is.
The company needed to regain flexibility". "Having a stretched balance sheet when you're in the agency business is not good because you can't do the acquisitions that you may be required to do to diversify and reinvent your business,” de Saint Hilaire said.
The Times said analysts think that investors will probably need to stomach more margin pain in the short term as WPP seeks to invest in potential growth opportunities.
“With the shares trading at just over five times forward earnings, a record low, speculation has mounted that it could fall prey to an activist investor, who may agitate for a breakup of its operations,” The Times said.
“Some have argued, however, that such a move would run counter to the chief selling points of the big ad houses, which act as a one-stop shop for brands running global marketing campaigns.
“With investors already fatigued, Rose will need to quickly convince that she is capable of returning WPP to its glory days.”
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