WPP boss under pressure to sell a better story

Weeks into his tenure as chief executive of WPP, Mark Read hosted a four-day internal strategy event at a trendy hotel looking out on Brooklyn Bridge in New York. With more than 100 of his senior leaders in attendance, Read sought to mark the dawning of a “new WPP”.
Without explicitly speaking ill of his predecessor, Sir Martin Sorrell, Read identified several “weaknesses” with the business he had inherited: its structure was “not well-suited to capture growth”, decision-making was “too complex” and the company could be seen as “inflexible, expensive and slow”.
He went on to set out a three-year plan to make WPP, a holding company made up of dozens of different businesses brought together by Sorrell over more than 30 years, “simpler” and capable of “stronger growth”.
Six years on and it appears Read is not quite done. Mergers and sales within the business keep coming, and WPP’s share price — trading at around £12 when Read started — stands at £7.18. WPP has underperformed most of its rivals, with Publicis, Omnicom and IPG all now claiming larger valuations.
For Read, pressure is building. WPP’s largest individual business, GroupM, has faced a torrid time of late, and will soon learn whether it has won two mega-contracts with Amazon and Unilever.
And next month, the former BT chief executive Philip Jansen, a forceful character unafraid of confrontation, will join WPP’s board before starting as chairman in the new year. At that time, Read’s future will come under the microscope. “Is Mark worried?” said one boss within the WPP empire. “Of course he is. Anybody would be.”
Not long after Read started his job, the challenges of WPP’s sprawling empire began to bite. In October 2018, the month of his strategy day in Brooklyn, a Saudi Arabian business event dubbed “Davos in the Desert” became the subject of a corporate boycott following the murder of the journalist Jamal Khashoggi. It later emerged that the event was partly organised by Richard Attias & Associates, a company half-owned by WPP, which had itself withdrawn leaders who were scheduled to appear. Read swiftly went about selling the stake.
Corners of WPP’s existing empire are still causing awkward issues today. WPP is facing a lawsuit in Kenya brought by Bharat Thakrar, the former chief executive of WPP-Scangroup. He claims that WPP unlawfully ousted him from his role. WPP, which wants the case thrown out, says Thakrar resigned following “allegations of impropriety”.
Under Read, several of WPP’s big creative agencies, which develop marketing ideas and materials for brands, and PR firms have been merged. Creative agencies VML, Young & Rubicam, J Walter Thompson and Wunderman have been combined to form VML; while PR agencies BCW and Hill & Knowlton merged last month to form Burson.
This month, WPP agreed to sell its 50 per cent stake in FGS Global to the private equity giant KKR in a deal that valued the corporate PR firm at £1.3 billion. And it is expected to cash in further when Bain Capital sells Kantar Media, the company behind TV ratings body Barb, which is 40 per cent owned by WPP.
US-headquartered GroupM, the largest media-buying business in the world with 41,000 employees, has been a problem area in recent years. The company, which plans advertising strategies and buys media slots for its clients, has lost a series of big contracts, including Shell, Uber and Swatch.
WPP is hopeful that Brian Lesser, a former chief executive for North America who will take the reins of the global business next month, will improve GroupM’s fortunes. In a recent note to investors, the analyst Michael Nathanson said: “WPP’s management team has embarked on a series of restructurings that is set to reposition the firm. Out of all the announced changes … we are most excited about Brian Lesser’s return to GroupM.”
Meanwhile, GroupM is battling it out for large contracts with Amazon, which the industry thinks could be worth $2.5 billion (£1.9 billion), and Unilever. GroupM is competing with Omnicom to win the Amazon account, while it is defending the Unilever contract. WPP recently won separate creative work with Unilever that could be worth $500 million.
The outcome of the media contract decisions could be significant ahead of Jansen joining the board.
The soon-to-be-chairman’s arrival is seen by many observers as a threat to Read. As BT chief executive, Jansen was reported to have orchestrated the departure of his chairman, Jan du Plessis, after an alleged boardroom bust-up.
Few expect Jansen to make hasty decisions at WPP. “I think if you’re a new chairman coming in, will you sack the chief executive straight away? Probably not,” said one former WPP bigwig. “But are you going to look at them closely? Yes, you are.”
Supporters of Read insist that, after inheriting a “mess” from Sorrell, he has done much to improve WPP. Although one friend describes him as “not obviously charismatic”, Read, “a details man”, has built up a strong network. In June, he interviewed Elon Musk on stage at a major industry event in Cannes. “You won’t find him out socialising at parties,” he said. “But he’s bright, interesting and has something to say.”
While WPP has underperformed rivals on the stock market, the company has returned more than £4 billion to shareholders in dividends and share buybacks since Read took office and he has invested big in AI. Read loyalists also believe that WPP is suffering from the general “discount factor” that some feel is affecting numerous UK-listed companies.
One result of this share price malaise is that the company has attracted rumours of private equity interest. The arrival of Jansen, who has strong connections in private equity, having led the wholesaler Brakes for Bain Capital and Worldpay under the ownership of Bain and Advent, will do little to quell that speculation.
“I’m sure Phil will see if he can engineer something,” suggested one source who has previously worked with the new WPP chairman.