The best technology is indistinguishable from magic.
Mark Read, CEO of WPP, used this line, paraphrased from a famous quote by science fiction author Arthur C. Clarke, to introduce the advertising group’s plans for AI.
He was starting a long and detailed presentation to analysts at WPP’s capital markets day in London, outlining the ongoing restructuring of the group.
The biggest of the global advertising companies has already merged creative agencies Wunderman Thompson and VMLY&R to be known as VML and combined communications agencies Hill & Knowlton and BCW to form Burson.
And the “accelerated evolution” of the media side, GroupM, includes streamlining operations and back-office functions.
WPP says it will lead the industry through agencies AKQA, Ogilvy, VML, Hogarth, GroupM and Burson, representing close to 90% of WPP’s revenue less pass-through costs.
“We'll show you why creativity matters,” he said.
“Sometimes underestimated, creativity makes our work effective, and multiplies our clients’ investments in marketing, to drive financial growth.
“In a more complex AI driven world, we believe it is even more critical for our clients. But to deliver it we and our clients need to transform.”
WPP is on a long road of changing the structure of the company.
Business growth currently is little more than flat, dragged down by account losses in retail and consumer packaged goods and cautious clients in the face of a technology downturn and an uncertain economic climate.
However, the company has revealed an investment of £250 million (AUD480 million) a year in AI, which WPP sees “as an opportunity not a threat”.
The plan comes with cost cutting. WPP is seeking annualised net cost savings of £125 million (AUD240 million) in 2025, with 40% to 50% of that expected to be achieved in 2024.
A slide from the presentation:
Read is upbeat despite the downturn.
“After two of the fastest growth years in our history coming out of COVID, our technology clients reduced their investment after very strong growth,” he says.
“And while we’ve been doing well on winning new business, in general, we face a tougher set of reviews, particularly in our media business in the US.”
But he says investments, together with the commitment of a talented set of leaders, will deliver faster growth, improved margins and stronger returns to shareholders.
Read launched what he called the third stage of WPP’s strategy, Innovating to Lead.
“During COVID, we grew our client relationships within the last ever client review in our industry in our unique partnership with the Coca Cola company.
“We continue to strengthen our leadership and build a culture that brought us together during COVID. We invested organically in AI and new capabilities, influencer marketing and commerce.
"I believe we have a strong, cohesive and motivated team to lead the company in my view, which may admittedly be biassed, the strongest in our industry.
“Now as well as people, technology is critical to us, and our technology and data capabilities have been strengthened through a mix of organic investment, acquisitions, and partnerships.
“Organically, our focus has been building platforms powered by data and now AI, our acquisitions have been more disciplined. With a heavy emphasis on technology, more than 70% of our acquisition spent on technology powered companies.
AI was the centerpiece of the presentation. And it is all about reducing costs, being more efficient and accelerating growth.
“We've been using it (AI) in our work going back at least 10 years,” he says.
In 2014, WPP helped retailer Tesco optimise the delivery routes with AI. The first creative work was in 2016 when J Walter Thompson had a campaign that used AI to create Rembrandt paintings, a precursor to Midjourney, a generative AI program for images.
“Our belief is that AI will be as transformative to our business as the internet was 30 years ago,” he says.
“Our industry immediately may be the most disrupted of any industry, recently, first by the Internet, then by the mobile revolution.
“But importantly, through this time, WPP has remained relevant to its clients. And our goal is to remain just as relevant through the AI age.
“An explosion of generative AI is similarly disruptive, because for the first time, computers can do things we thought only people could do -- take pictures, write, copy, create images, draft press releases.
“Gen AI will change not just the way we engage with consumers, it’s also going to change the way that we work.
“We have to embed AI in the way that we work. It's going to make us more efficient, and take out costs … it has to be done. It's going to help us reduce costs, which we can reinvest and use to improve our margin.
“We have to embed AI in our products and services, as well as create new ones.”
He says AI is going to augment creativity, not replace human beings.
More of an enhancement to improve the ROI delivered to clients.
“It's going to help open up new business models,” he says.
He says WPP is mission is to be the creative transformation company.
“By this we mean we want to apply creativity to each area of what we do, not just in advertising, but in our media plans or social campaigns, or design work and public relations advice.
“We're also in the business of transformation, helping the world's largest companies, both global and domestic, to transform how they market in a very different world.
“And in a world that's changing as fast as ours, the need to transform and integrate our services is even greater.
“It's not just about AI. It's also about helping clients use influence and figure out TikTok is dealing with the proliferation of channels and new advertising opportunities on Amazon and Netflix, we have to help clients navigate the polarisation we see in society."
“To do this successfully. WPP needs to bring together many different skills and integrate them for our clients. We also have to use judgement and experience old fashioned but important skills.
“And if you look at our top 10 clients, that's what we're doing today is leading to our top 10 clients growing at 6.6% versus 2.6%.”
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