Credit: Suad Kamardeen via Unsplash
WPP, seeing a growth gap in the performance of its media business, GroupM, is accelerating changes in a bid to ”catch up” to and then “leapfrog” competitors.
GroupM, making up 40% of WPP’s revenue, facing a more challenging media environment and with client losses behind it, is a priority for the UK-based global advertising group.
One report suggested GroupM would also have a name change to WPP Media. The company would not be drawn. “We don’t comment on speculation," said a WPP spokesperson.
The media buying arm, which is being “simplified” (and not restructured as in the rest of WPP), lost the Coca-Cola North American media business in the March quarter to Publicis Groupe.
However, the client losses in the UK, weakness in Europe and a challenging environment in China, masked growth in North America of “low to mid to single-digits” in the March quarter.
Overall, according to a presentation by WPP to market analysts, GroupM fell -0.9% on a like-for-like revenue less pass-through costs basis in the three months to March compared to +2.4% in the same quarter last.
This compares to a negative -2.7% to £2.482 billion for WPP as a whole. And the outlook is for a full year result from flat at best to -2%.
Locally, GroupM in Australia has been bucking the global trend, with EssenceMediacom winning Specsavers and retaining the Queensland government account.
“The lion’s share of the growth gap between us and our leading peers is attributable to the gap in performance of our media business, in particular in the US,” CEO Mark Read told the analysts when releasing March quarter results.
“We see some encouraging signs of progress from the strategy we launched in January 2024 to simplify and integrate the GroupM offering, but it is important that we redouble our efforts.”
Read said GroupM’s go-to-market must be as simple and integrated as it possibly can.
“Further simplifying GroupM not only drives greater cost efficiency, but makes it a simpler and easier business for our clients to do business with,” he said.
“And that's what we mean by moving to a more client-centric model, taking out silos and barriers and cost within the organization, to focus all of our resources on client success. -
“Secondly, it is essential that not only do we catch up, but leapfrog our competitive set in terms of how we use AI, data, and technology to drive business outcomes.”
Part of that focus is the acquisition of InfoSum and integrating that business’s capabilities within WPP Open, the company's AI tool.
Read said the loss of the Coca-Cola North American media business in the quarter was difficult.
However, the client had given a detailed debrief, providing a good understanding of “our strengths and challenges”.
“We're making good progress towards renewing our broader agreement with that client,” he said.
He said conversations with clients have been positive. “We're confident with the deal, alongside our broader simplification efforts, will drive a step change in performance, particularly in competitive reviews.”
“I you look at sort of the big new business wins in GroupM last year, we did retain and expand our Unilever relationship. We did win J&J in North America, and we did win Amazon outside the United States.
“I think we've done 6,000 or 7,000 new business pitches this year. Very few of them hit the headlines. So, there's a daily cadence of new business opportunity, and I do think we're seeing some bigger consolidation from clients, things that are not necessarily in the headlines, and things people don't necessarily know about that support what we're doing.
“Within that I think we're seeing the advances and our ability to demonstrate what we have operating today in WPP Open … an actual operational tool as being very compelling to clients who take the time to really dive into what we're doing.”
CFO Joanne Wilson said the profile/loss impact of simplifying GroupM’s structure will largely be neutral over the course of 2025.
However, the timing of associated costs will weigh on the margins of the first half of the year.
A slide from the analyst presentation:
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