Sectors: Creative, Media & Technology

Commenting on the news, Green Square’s partner Barry Dudley, said: “Sir Martin is a unique character who ran WPP in the way that suited him, the simplest description may be ‘autocrat’. But even autocrats need impressive people around them and for Mark and Andrew to have been at Sir Martin’s side for so long is proof alone of their pedigree. Can Mark step into the CEO role? Without doubt and given the complexity of the group, its networks, geographies and all the vagaries that go with a people business, having someone that already knows this inside out seems obvious. Having said that, I suspect that one of the big things that Robert Quarta is grappling with is the FAMGA (Facebook, Apple, Microsoft, Google, and Amazon) factor – is there a need for someone from that world to perhaps bring new thinking and perspectives…time will tell!Today, WPP confirmed the appointment after four months of searching, also adding him to the board of WPP as executive director.” Roberto Quarta, Chairman of WPP, said: “The Board carried out a rigorous selection process, assessing internal and external candidates. That process, alongside Mark’s wise and effective stewardship of the business in the last few months, left us with no doubt that he is the right leader for this company, and we are delighted to announce the Board’s unanimous decision to appoint him as chief executive officer of WPP.” “Recognised for his leadership throughout the industry, he has an intimate understanding of the business, he enjoys very strong internal support, and he has earned the respect and endorsement of our clients with his constant focus on their needs. He has played a central role in many of WPP’s most successful investments and initiatives, and he has deep experience at board and operational level. Most recently, Mark led the transformation of Wunderman into one of the world’s top digital agencies, and he understands the importance of culture in creating successful organisations. In short, he is in every way a 21st-century CEO,” he added. Quarta has has resumed his role as non-executive chairman as Read is appointed. Read, said: “Our industry is going through a period of structural change, not structural decline, and if we embrace that change we can look ahead to an exciting and successful future. Our mission now is to release the full potential that exists within the company for the benefit of our clients, to accelerate our transformation and simplify our offering, and to position WPP for stronger growth. “To achieve that we need to foster a culture that attracts the best and brightest: inclusive, respectful, collaborative, diverse. What makes our company special is its people, and I am very proud to have been given the chance to build a new WPP with them,” added Read. Details of his contract have also been revealed, including a tough non-compete clause. His annual salary will be £975,000 with a potential bonus of £250,000, up to 40% can be deferred into shares over a two year period and a benefits package of £35,000 within the contract, a substantially less lucrative deal than that of Sorrell in his final years. The next steps for Scott have also been revealed with him set to continue on the post of chief operating officer of WPP on a permanent basis and as a key member of the senior management team. Read more

The New York-based holding group announced its second quarter results on Tuesday (17 July). Revenue growth was 2% overall with North America (by far Omnicom’s biggest market with 57% of its business), dropping 1%; and Europe (27% of the total) up nearly 12%. Net income (profit) for the quarter actually rose to $364.2m from $328.6m. Despite this, Wall Street took fright and the share price tanked by almost 10%. While Omnicom is clearly not on the verge of going under, this shows just how edgy investors are right now. And anyone who holds stock in Publicis would be feeling extremely jittery also after seeing the Paris-based group’s Q2 numbers when they were unveiled yesterday. Organic revenue, the measure that strips out the effects of deals and currency swings, slipped 2.1% in the period for Publicis. A volatile US healthcare business (it’s rumoured that Publicis wants to get out of this particular sector) and the new GDPR privacy rules in Europe contributed to the sluggish results. Worse still, the markets had been expecting growth; and although Publicis’s operating margin rate rose to 14.3% from 13.7% a year ago, this wasn’t enough to soothe nerves rattled by the long-term structural issues the ad industry, and the big groups especially, face. The downturn must have created a headache for chief executive Arthur Sadoun, who took the helm from Maurice Levy just over a year ago, and who won plaudits for his restructuring efforts. But that seems a long time ago now, and stockholders took fright, with the shares falling 10% (WPP’s shares also fell yesterday, by 3.8% – another indication of the uncertainty surrounding the industry). Clearly the investor community is increasingly nervous about the prospects of the ‘big five’ holding groups (Omnicom, Publicis, WPP, IPG, Dentsu Aegis) and indeed the viability of the holding group model itself. Everyone knows and (to a degree, at least) understands that there are seismic shifts going on in the marcomms industry: clients clamping down on costs; scandals around programmatic ad placement; the rise of Facebook, Google and Amazon, and other big digital players, who can be accessed without the need for an ad agency; the growing threat from consultancies like Accenture and Deloitte… We’ve written about these many times over the past few years. What’s interesting now is not what’s happening to the marketing services industry, but what the established players are doing about it. Rivals like Sorrell and Levy/Sadoun may have grabbed the headlines over the years, but Omnicom chief John Wren is a canny operator. And he’s been quietly tidying up his sprawling empire, selling businesses deemed non-essential (such as Sellbytel, a business providing outsourced sales, service and support) and also, rather belatedly, entering the data wars with a new entity called Omni. Omni, which was rolled out last week, is Omnicom’s answer to big rival Interpublic’s recent $2bn purchase of a majority slice of data specialist Acxiom; and Dentsu Aegis’ buyout of Dutch firm Oxyma Group. It will use data to profile customers and predict what kind of information they want to see from a creative and messaging standpoint, and connect that to where they are in the media landscape. To achieve this, Omni will be using artificial intelligence and machine learning algorithms. Interestingly, it seems that Omni will not be generating or gathering its own data, but ‘renting’ it from others like Neustar, LiveRamp, Salesforce, Experian and other data vendors. This is a fairly smart move because, as Wren said last week, it ‘de-risks’ the business. It also allows the global group to act in a way that respects and complies with regional privacy and regulatory rules. The aim is not so much the gathering of big data, but changing the way ads get made and media is placed, so it impacts on all areas of Omnicom’s services – creative, strategy and media. Up until now, AI and data’s uses have mostly been limited to media buying with souped-up programmatic algorithms that are able to set pricing and determine the best time to run a campaign. Omni’s an interesting idea. In China, for example, certain colours are regarded as lucky. Ads featuring red, yellow and green are more likely to resonate with consumers. Words and messages can be crafted too – so, for instance, calls to action can be created to appeal to people looking to buy a hybrid car or swapping their telecoms provider. This can either act as a trigger to the creative teams, or more impactful messages can be more accurately selected from a pre-made portfolio of messages. In an age where short-form video content is becoming increasingly important, especially on mobile devices, this allows Omnicom’s agencies to push messages to those consumers for whom it would have the most impact, in a timely fashion. It ticks the right boxes – speed, relevance and highly targeted (thus eliminating waste, which provides clients with the transparency they’ve been asking for). For brands that spend hefty amounts of cash on TV ads, Omni could potentially open up troves of insights about the impact of TV ads on digital media. TV-to-digital tracking is limited to inventory purchased via advanced TV like over-the-top platforms and addressable TV tactics that serve targeted ads from set-top boxes, but digital TV ads are likely to become much more mainstream over the next few years as streaming and catch-up services start to replace linear and ‘over the air’ broadcasts. So Wren and his team seem to have done a good job here. The challenge is to make this intriguing service work (integrating scale and personalisation), and to trim down what is perhaps a now untenable agency model. Like its rivals, Omnicom has to focus, divest itself of non-core businesses, become leaner, nimbler and faster, and to demonstrate to clients that they are offering value – and better value than can be offered by Facebook, Google, the consulting firms and the hungry start-ups unburdened by high centralised infrastructure and support costs. There’s also the danger of putting too many of one’s eggs in the data basket. The gathering and use of data is now a hot topic for both consumers and regulators, and laws everywhere are likely to be tightened up. The EU’s GDPR regulations, launched just two months ago, are known to have caused many DM and CRM operators all kinds of problems already; and there is an acute danger of a consumer backlash, with those served ads becoming increasing resistant to, and resentful of, messages served them without permission or consent – even if they are relevant or timely. Fascinating times ahead. Read More