The British advertising giant that lost its way
Britain's top advertising executive, Mark Read, was in prescient form as he addressed a room of leading industry figures at the SXSW conference at Shoreditch Town Hall in east London last week.
Talking about the impact of artificial intelligence, Read, the head of FTSE 100 advertising group WPP, said 'there will be fewer people involved' doing the work required of his business in future.
Just a few days later, WPP announced that the 58-year-old would step down from the advertising behemoth at the end of this year. No one could accuse him of not leading by example.
Read's departure comes after WPP lost its title as the world's largest advertising company to French rival Publicis – cementing the decline of a British media stalwart that many feel has lost its way.
Now the London advertising giant, which owns well-known agencies including Ogilvy and Grey, will be tasked with appointing a successor who can breathe new life into the company – and with it the UK's advertising scene more widely.
Britain's advertising industry has long enjoyed a glamorous reputation, cemented through television shows and its adland heyday in 1960s Soho.
'It's in quicksand'
The £40bn industry helps the UK punch above its weight on the global stage – and the wobbles at WPP should concern anyone interested in Britain's standing around the world.
'In a way this symbolises the sludge-like decline of the UK in recent years,' says media analyst Alex DeGroote.
'This should be an exciting, thought-provoking, game-changing advertising company. It should be a bit of an icon for London, but it's in quicksand.'
Read, who has worked at WPP for more than three decades, was appointed chief executive in 2018 by former chairman Roberto Quarta at a turbulent time for the company.
At the time, Read was chief operating officer, having led several WPP divisions over the years.
Sir Martin Sorrell, the mercurial entrepreneur who built WPP from a wire basket manufacturer in 1985 to a multinational company, had stepped down in a storm of allegations of personal misconduct, which he has always denied.
The advertising group was, by anyone's reckoning, a bloated organisation that had ballooned following a hotchpotch of acquisitions under Sir Martin's tenure. Read's most pressing priority, therefore, was to slim down and simplify this 'unwieldy' corporate structure.
He did so through a string of disposals, including the £2.5bn sale of a 60pc stake in market research group Kantar and, more recently, the $775m (£572m) sale of a majority stake in PR firm FGS Global.
The ad boss also merged a number of agencies and restructured the business. In what will now be one of his last moves as chief executive, Read last month rebranded the group's media buying division GroupM to WPP Media in an overhaul that will lead to heavy job cuts.
'He came on board as chief executive at quite a difficult time when Sorrell was effectively ousted,' says DeGroote. 'The company is a lot simpler today than it was. The main feature of the last seven years has been simplification.'
Yet beyond this simplification has been a story of decline, as WPP's growth has all but ground to a halt. In a trading update in April, WPP said it expects revenues to fall by as much as 2pc this year.
For shareholders who backed WPP under Sir Martin, Read's tenure has been painful. Shares have more than halved since he took over seven years ago – falling 52pc – giving it a market value of £6bn and leaving investors nursing steep losses.
WPP can point to several major client wins in recent months, including Unilever and Amazon. But it this week lost its $1.7bn (£1.3bn) Mars account to arch rival Publicis.
Critics accuse Read of overseeing the demise of scores of advertising brands, among them J Walter Thompson and Wunderman. Industry figures also point to an exodus of talent as a series of mergers and lay-offs triggered a brutal game of musical chairs for staff.
Ajaz Ahmed, the founder of agency AKQA who left WPP following a row with Read last year, says: 'There has been very little accountability over the past few years when you consider how much leakage of talent and clients and wasted expenditure in areas that have not driven any growth for the company.'
While WPP has stalled, its competitors have taken over.
Publicis last year stole WPP's crown as the largest advertising company by revenues. The upcoming merger between Omnicom and Interpublic – two other rivals – means WPP will slide further down the rankings and face a major new challenger.
'The numbers don't lie: the valuation has halved,' adds Ahmed. 'They are not growing at the same rate as their main peers and have been relegated into the second division.'
DeGroote adds: 'It's a company, which to be honest, I think a lot of investors have given up on.'
Not quick enough to adapt
But what is behind the decline? WPP has undoubtedly faced macroeconomic challenges, including a sharp slowdown in China – where it was hit by a corruption scandal – and a slump in advertising spend by major tech clients.
But analysts say that Read – perhaps preoccupied by restructuring – was not quick enough to adapt to an advertising market that has been upended by technology.
Meta and Google hold an increasingly powerful position and are developing their own tools to allow brands to create advertisements themselves, sidestepping traditional agencies. AI poses an even more existential threat to the industry as new software emerges with the capability to automate creative processes.
Read has undoubtedly sought to embrace the new technology in recent years. He bought AI tech firm Satalia in 2021 and has been developing WPP Open, which is used by more than 50,000 people, amid a broader pledge to invest £300m in AI each year.
But critics say these moves pale in comparison to the savvy acquisitions made by Publicis – which include data giants Sapient and Epsilon – while WPP's business model has remained fundamentally unchanged despite radical changes in the industry.
Richard Pinder, the former chief operating officer of Publicis who also worked at WPP, describes the WPP approach as 'squeezing the lemon'.
'The operating model hasn't changed,' he says. 'It's 'perform or we'll close it down, perform or we'll fire people, perform or we'll merge you'.'
'Pragmatism beats dogmatism'
Pinder argues that Publicis, by contrast, embraced technology and overhauled its business model to focus on offering broader business solutions more similar to those of a consultancy.
'My summary is that it was pragmatism beats dogmatism,' he adds. 'This feels to me like WPP could have owned the future of advertising, but has walked away from it.'
Some detractors lay the blame at Read's door. 'Sorrell, for all his faults, was a terrific frontman and was a very identifiable face,' says De Groote. 'Mark is not that sort of character ... I doubt anybody outside of WPP would know who he is.'
Pinder describes Read as a more likeable person than Sir Martin, but argues this might have worked against him. 'The one who follows the tyrant often does badly unless they go with a new mantra,' he says.
Others rally in support of Read, arguing that he ascended to the top job in difficult circumstances and inherited issues from his predecessor.
Moray MacLennan, the former chief executive of M&C Saatchi, says: 'It was so chaotic at WPP when he took over it was existential. I think he has saved WPP.
'Sorting out a mess is not particularly glamorous, it's really draining ... It was asking a hell of a lot and I think he did a really decent job.'
'A stalwart job'
Claire Enders, a media analyst, agrees that Read 'stepped into a blaze'. She adds: 'I don't blame Mark Read for any of the problems he inherited, nor for the problems that he tried to solve.
'He did a stalwart job and he was parachuted into an extremely difficult situation that he's delighted to be out of.'
In a LinkedIn post this week, Lorraine Twohill, Google's chief marketing officer, described Read as a ' visionary who ushered WPP first into a digital-first world, now into the AI era'.
Read's departure comes amid an escalating row with Publicis after WPP accused the French company of using low-quality advertising inventory, such as websites built primarily for displaying advertisements.
Publicis, which has rebutted the allegations, last week sent a letter to Read and other top WPP executives threatening legal action.
Nevertheless, many believe the writing was on the wall for Read when WPP appointed Philip Jansen, the former BT chief executive, as its new chairman to replace Quarta.
Jansen, a heavy hitter in the City, will play a crucial role in determining Read's successor, and industry watchers argue that change is needed.
'It probably is time for someone else to come in with new ideas and do the next stage of WPP,' says MacLennan.
Ahmed says: 'The new chief executive needs to be a change agent, someone who is willing to spend most of their time in the US and the fast-growing markets, a champion of genuine innovation both in terms of the way the company works and the services it provides, and a winner.'
WPP's decline – not least its languishing share price – has fuelled speculation that the British advertising giant is ripe for either a takeover or break-up. While shareholders may support such a move, others fear an ignoble end for what was once the jewel in Britain's advertising crown.
'It's lost its raison d'être,' says DeGroote. 'If you get this thing humming, the price will perform. The UK needs a strong WPP.'
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