Just what is going on at WPP? One of the industry’s unquestioned juggernauts is seemingly struggling just to keep its head above water of late.

Covid and the subsequent global cost-of-living crisis will no doubt have  played a large part in the group’s significant difficulties – but where its rivals have managed to claw themselves back up, WPP appears to remain stuck in the trenches.

The historic outfit might have been hoping for better things in 2024 after a considerable fat trimming operation towards the end of 2023, which saw the merger of two of its biggest agencies VMLY&R and Wunderman Thompson to form VML – as well the cutting of around 3,000 jobs across the board.

Alas, it seems that a touch more ballast needs to be dropped for WPP to get back to where it wants to be. The business suffered a disastrous first half of 2024 in which it was forced to downwardly revise its yearly growth forecast to -1% to 0% (from a not-very-ambitious 0% to 1%).

Anatomy of a fall

We must of course remember that the industry as a whole is currently going through an intensely tricky period – and few, if any, are putting up particularly stellar numbers.

Redundancies, mergers and cuts are the watchwords as the agency world adapts from a landscape of abundance to one of carefully calculated restrictions. Such is the legacy of the worst global pandemic in over 100 years.

In whatever ways WPP attempts to plug its haemorrhage, they seem to keep on coming. EssenceMediacom’s disastrous run of account losses has been compounded by the disbanding of EssenceMediacom X. And – despite its Amazon media win – GroupM is also navigating some decidedly troubled waters.

“If the provisional stats are correct everyone (bar Publicis it would seem) is having a tough year. New biz down significantly, redundancies still going strong, and budget cuts galore,” Elvis CEO, Tanya Whitehouse points out.

“But perhaps WPP is suffering more due to its own actions: recently there seems to be far more headlines debating their decisions to merge big agency names, their internal politics and their staff turnover than their performance at Cannes, for example.”

Striking a more optimistic tone, Live & Breathe MD, Nick Gray adds: “Forecasting in today’s marketing services world is, I hate to say, a lottery. This is especially true with a merged group of people, clients, and disciplines. Not to mention of course the macro commercial factors.

“I can hardly blame WPP for getting it wrong. The age-old debate of agency brand dilution could have played a part, but I think more time is needed to really judge the performance of the merged group. Give it a chance.”

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Winter of discontent

There have been whispers for quite some time now that all is not well at WPP. From EssenceMediacom’s very public struggles this spring and summer (which have a had considerably negative knock-on effect for the wider GroupM business), to the sudden, and rather perplexing decision to merge two of its flagship global agencies VMLY&R and Wunderman Thompson in October last year.

This was followed by many reports of significant staff discontent within the group, rooted not least in many employees of both agencies online finding out about the merger shortly before the official press release itself. (Unfortunately – but perhaps not surprisingly – no-one at WPP was willing to either confirm or deny these allegations.)

Let us not forget that both VMLY&R and Wunderman Thompson were both the results of mergers themselves in 2018. The maths aren’t difficult; four becomes one as WPP enters streamlining overdrive. Is cutting that much fat ever a good sign?

Whitehouse isn’t inclined to think so: “I can’t believe all is well when the people who work for these businesses (or what little is left of them) have been through what seems like a merger a week.

“In an industry that supposedly worships the power of the brand, those in charge have systematically decimated some old and new industry giants, and all for what appears to be cost efficiencies. What do the remaining employees and clients buy into anymore?”

Taking a significantly more diplomatic tone, Gray points out that in business, like in life, peaks and troughs are inevitable: “A merger like this would always result in some reduction in overheads. Anyone not realising that would be very naïve.

“No senior leadership team wants to deprive people of their livelihoods but with the constant pressure on margins, hard decisions need to be made to secure as many jobs as possible. Hearing the news through a press release is a bit shit though. They should have managed this better.”

Read’s Redemption Arc?

Gray undoubtedly makes an excellent point. The agency landscape is fundamentally altered from what it was even ten years ago, with Covid exacerbating pre-existing economic issues all while resetting the very foundations of how people go about their daily working lives.

The agency sector, much like the wider economy, is going through a generational transition that will come to define how business operates for decades to come.

Historic juggernauts like WPP need to adapt – and fast, or else suffer at the hands of that old adage: ‘The bigger they are, the harder they fall’.

So what is the root of the problem? Glaring structural and operational inefficiencies, or the devastating consequences of an economic typhoon that has buffeted the world economy for nigh on five years now?

Unsurprisingly, the answer is both.

“I think it is both a rough patch for the group AND a sign of the times moving forward,” Gray surmises.

“If you step back for a second and peer into this business model, it’s hard not to be totally perplexed by it. We are almost masochists in loving what we do.”

Whitehouse continues: “I imagine they’ll be hoping that the cuts and reshuffle solve their short-term commercial issues, buying them a little time and space to solve their more troublesome brand and reputation challenges. Whatever happens, it will no doubt create headlines.”

While Read certainly has tricky job ahead, he will most likely right the ship in the end. Surely juggernauts like WPP really are too big to fail?

After all the fat has been stripped away – and there may be even more to come – surely the group will be left with a much leaner, streamlined operational structure that will enable it to return solid organic growth?

One shudders to think what might happen to a true giant of British industry if not.