Credit: Josh Calabrese via Unsplash
Mark Read, the CEO of WPP, the world’s largest advertising group, is ready to demonstrate his company’s expertise in AI (artificial intelligence) at a moment's notice.
“I now have WPP Open on my iPhone allowing me to demonstrate the power of AI in the creative process to clients,” he told market analysts in a briefing.
He was explaining how WPP, while still expecting flat to negative full year revenue, returned to growth in net sales for the September quarter.
The increasing adoption of AI across the group is part of the company’s underlying strategy for a more efficient enterprise with fewer, “stronger” brands underpinned by new technologies.
Read, briefing on September quarter results, said this would make WPP more competitive and structurally more efficient with an improvement in profitability.
“There's more work to do, but I am very pleased with our progress,” he said.
Like-for-like revenue less pass-through costs, a metric used by WPP, showed 0.5% growth in net sales for the three months to September, ahead of analyst forecasts.
The return to positive territory was led by global media agency unit GroupM which grew 4.8%.
But the improvement was broad-based across most client sectors, including the technology sector which has been dragging on most players in the media business.
Tech clients, which weighed on WPP by 9% in the March quarter, 1% in the three months to June, returned to growth at 1.3% in the latest quarter.
Creative agencies fell 3.1%, driven mainly by three factors: the loss of the Pfizer account, the macro and business conditions in China and shrinking in project-based work.
However Read said WPP’s top 10 clients grew 7% in the quarter despite drag from the loss of a health care client.
“We won Amazon's media account outside the Americas with a pitch built around WPP Open and led by a team drawn from across GroupM and WPP leveraging our unmatched global footprint,” he said.
“At Unilever, we've consolidated the creative work with additional key beauty brands and expanded our media relationship in the US, in particular with retail media and activation.
“We remain Unilever's most significant media partner by some way and Q4 also started well with our creative win at Starbucks at a pivotal moment for that business and the retention of Honors Global Media account winning additional work, including within China.”
Read said the factors that contributed to the Amazon account win were a very strong team with top talent sourced from across GroupM, a demonstration of WPP Open and how it helped Amazon to improve its media effectiveness and its operations, a very close collaboration with VML throughout the pitch, demonstrating both how WPP can bring creative ideas to life through media.
“I think we saw the same factors come to play at Unilever, where we're the incumbent on much of the business and after a very competitive review, we came out, broadly speaking, ahead of where we started,” he said.
“Most importantly, we consolidated the retail media and retail activation business in the United States that we lost three years ago, we demonstrated a very strong integrated approach across media and commerce and how we can help Unilever to win in retail, which is really where it matters.”
However, the recent new business wins will mainly mean new revenue coming through in 2025.
Read said this and continuing economic pressures meant expectations for the full year are unchanged.
Full year guidance is like-for-like revenue less pass-through costs of -1% to 0%.
Read’s vision for a more efficient company includes the consolidation of creative into VML, the creation of public relations powerhouse Burson and the so-called “simplification” of GroupM.
But the glue to all this is WPP Open and the adoption of AI across the company.
“We do believe AI will be fundamental to WPP's future,” Read said.
“We can see its potential to make our people more productive, to produce more work at high quality and lower cost and to make our work more effective by delivering campaigns that are more targeted and relevant to consumers and drive higher ROI to our clients.
“We're investing more than GBP250 million in WPP Open, some of that incremental and all of that investment really focused on the scaled adoption of AI across WPP's agencies.
“We're using WPP Open to deploy AI tools into the workflow.
“The other benefit of WPP Open is to allow us to streamline how we work together across the company and to bring creative, media, and production activities together more seamlessly.
“It's being architected in a way that allows work to flow across the company and also importantly data. This is going to be critical to delivering both efficiencies and production as well as more effective media plans and driving data into the creative process.”
WPP is seeing steady adoption across the group. Monthly active users are up 107% since the start of this year.
“Not only are more people using it, but they're using it more often, and I would make one more comment on AI. While it's fundamental, I still think that 2024 is a year of, let's say, proof of concept where we see what AI can do and its potential.
“Next year, we very much start to see its impact more fundamentally on the business. That said, where we are seeing the impact is in new business where clients are starting to look much more at technology usage and adoption.
“As I said at the start of this year, client RFPs barely mentioned AI, that’s starting to change and clients looking for partners who have strong capabilities and platforms powered by AI.”
A slide from WPP's analyst presentation:
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