WPP has declared the initiation of the next phase in its strategic agenda, aiming to capitalize on the vast opportunities presented by artificial intelligence (AI). The strategic pillars set by WPP are strategically designed to expedite growth, elevate profit margins, and enhance cash generation.
Leadership Through AI, Data, and Technology: WPP is set to take the lead in AI, leveraging its edge in artificial intelligence acquired through the 2021 acquisition of Satalia. This dominance is fortified by organic investments in AI, client technology, and data. WPP boasts deep collaborations with industry giants such as Adobe, Google, IBM, Microsoft, Nvidia, and OpenAI.
The strategic plan involves the provision of AI-enabled services and tools through WPP Open, the common technology platform. Proprietary AI models will power these offerings, ensuring enhanced returns to clients and improved marketing performance through the integration of WPP’s proprietary datasets and client-level data.
Noteworthy partnerships with industry leaders, including Adobe, Google, IBM, Microsoft, Nvidia, and OpenAI, will drive AI services, while safeguarding client information, brand safety, copyright, and ethical considerations remain a priority. WPP Open has already garnered over 28,000 users across WPP and has seen adoption by key clients, including L’Oreal and Nestle.
Unlocking Creative Transformation for Growth: WPP aims to bolster client relationships by leveraging its global scale and integrated offerings in creative, media, production, and PR. The strategy encompasses expansion into growth areas such as commerce, influencer marketing, and retail media to capture a larger share in the expanding market.
Building Market-Leading Brands: WPP is set to lead the industry through its six powerful agency networks – AKQA, Ogilvy, VML, Hogarth, GroupM, and Burson – which collectively represent nearly 90 percent of WPP’s revenue less pass-through costs. Special attention will be given to VML as the world’s largest integrated creative agency and GroupM as the world’s largest media agency. The establishment of Burson as a leading global strategic communications agency, bringing together BCW and Hill & Knowlton, is also on the agenda.
Efficient Execution for Strong Financial Returns: The creation of VML and Burson, coupled with the simplification of GroupM, is expected to result in both growth and structural cost savings.
These measures aim to unlock scale advantages and further efficiency savings. WPP anticipates annualized net cost savings of approximately £125 million in 2025, with 40-50 percent of these savings expected to materialize in 2024. An associated restructuring cost of about £125 million is projected for 2024.
In addition, WPP aims to target gross savings of approximately £175 million from efficiency opportunities across both back-office and commercial delivery. These savings will be reinvested to support growth and help achieve the medium-term margin target.
The entire strategy is grounded in a disciplined approach to capital allocation, with a commitment to continued organic investment, a progressive dividend policy, and a meticulous approach to mergers and acquisitions (M&A). This approach is supported by a robust balance sheet and an investment-grade credit rating.
WPP’s CEO, Mark Read, expressed confidence in the transformative potential of AI within the industry, emphasizing the belief that AI will enhance, not replace, human creativity.
Mark Read has highlighted ongoing investments in AI, including the AI-powered platform WPP Open and the strategic acquisition of Satalia in 2021, as integral components of WPP’s competitive offerings. An annual investment of £250 million in data and technology is earmarked in WPP’s 2024 financial plans to support the robust AI strategy.
