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The Way Of A Champion
After a bumpy 2018, WPP ushered in 2019 with a strategy meant to turn around the company in a three-year period. Globally the advertising & communication giant is fighting hard to regain its confidence and glory, and its role in India is critical in that mission
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In August 2019, WPP Plc’s first-half results put WPP India among the top fastest-growing markets, with a growth rate of over 12 per cent the second-fastest. Brazil grew by ten per cent …
~In late October 2019, shares in WPP jumped more than six per cent after the group reported a 0.7 per cent organic growth in the third quarter of the year…
Neither of these facts should have been particularly attention grabbing on first read. WPP, after all, is the largest advertising and communication firm, not just in India, but also globally. Its size and growth pace have dwarfed most others for long. In India, the group dominates nearly half the marketing, advertising and media industry. And yet, these headlines took more than their regular share of news space.
WPP India’s 12 per cent growth rate has come at a time when the Indian economy was firmly placed in the dreaded ‘muted-growth’ zone. Among the first things that are impacted in a slowdown are marketing budgets. While several large industry sectors are facing inventory-stuck-in-warehouse situations, according to WPP India’s Country Manager, C.V. L. Srinivas, 2019 was the company’s “best year in recent years”. India is WPP’s seventh-biggest market globally, and this continued growth reiterates both the market opportunity for WPP in India, and the expectation of a higher advertising contribution to the Indian GDP. At present, going by World Bank estimates, India’s GDP is estimated to grow at 7.5 per cent each year till 2021. It is estimated that the AdEx to GDP ratio would move from 0.36 per cent in 2018 to 0.42 per cent by 2022.
The jump in WPP shares in 2019 was even more of a surprise as this bounce back occured after more than a year of back-to-back loss-making quarters. The firm has wisely maintained its cautioned outlook, but for many in the industry, this was some much needed good news. Shares in WPP, which had a revenue of £15.6 billion last year, have almost halved since their peak in 2017. If any further evidence was needed to indicate the low point that 2018 was for the company, apart from the Wall Street scoreboard, on the creative front WPP relinquished its ‘Holding Company of the Year’ title to rival Omnicom at the Cannes Lions International Festival of Creativity 2018 (and 2019) after winning it for seven consequent years. The year was also marked by a host of long-term global businesses going up for reviews and poor performance in major markets like North America. Immediately after the shock exit of its once all-powerful CEO, Sir Martin Sorrell, in April 2018, Mark Read, the present CEO of WPP, was named joint COO.
Read’s 2018 was probably busier than that of any other ad boss. From the outside, a few things were evident Read had taken a number of steps to address internal qualms that come from seeing one’s company in the news for the wrong reasons. He was at the same time also meeting WPP clients, partners, advisors and the likes to better understand what the company’s, and his, next steps should be. The result was a strategy announced end 2018, that should turn WPP around in three years, making it a ‘creative transformation’ company in the process a clear attempt to move away from a traditional ‘holding’ company model.
The strategy reflects a vision for WPP with a focus on creativity and technology. It aims for a simpler offer to capture opportunities of a changing marketplace, and a streamlined structure built around the needs of marketers (essentially clients for WPP). This ‘radical evolution’ plan firmly eyes improved performance. WPP targets organic growth (defined as like-for-like revenue less pass-through costs growth) in line with its peers at a headline operating profit margin, excluding associates, of at least 15 per cent by the end of 2021 as a result of this strategy.
To kick off this turnaround plan, India was the first market Read visited in February 2019.
The India Opportunity
Recent downward revisions notwithstanding, India is expected to grow 7.1-7.5 per cent in FY 2020-21 according to Fitch/IMF. Investment cycle revival and sustained consumption being the key drivers, WPP’s media arm GroupM’s ad forecast report This Year Next Year (TYNY) estimates the Indian ad market to grow at 12 per cent in 2019 to $11.3 billion. In TYNY’s December 2019 update, India was the third top contributor to global growth, after the US and the UK. The report has called India the “world leader among larger media markets”.
As the Indian economy grows, advertising will play its own role in contribution to country growth. At present, it is about half a per cent of GDP in India and one per cent in most of the more mature markets. But India is one of the few markets where traditional and digital media are both growing. Given the burgeoning middle class, there will be continued growth. “Logically, ad-spend-to-GDP will catch up and will continue the growth opportunity,” observes Mark Read.
WPP agency brands in India include Ogilvy, Wunderman Thompson, VMLY&R and Grey among others on the creative side. It also houses GroupM that has agencies such as Mindshare, Mediacom, Wavemaker and then a plethora of agencies in PR, design, healthcare and the likes. Given the leadership position that some of these have in their respective disciplines, and as per industry estimates, WPP owns nearly 42 per cent of the Indian advertising industry market share. Its media investment arm GroupM owns 48 per cent of the market share, according to research company RECMA.
“Almost all our operating companies are doing well across communications, experience, commerce, technology etc. This is due to the stellar performance and hard work of our colleagues across WPP companies that have won us new businesses, grown our business with existing clients and helped scale up newer practices,” said Srinivas.
India As A Global Base
WPP’s new strategy has identified communication, experience, commerce and technology as its four top focus areas in this three-year period. From the looks of it, the company believes that this will assist it in shedding the traditional advertising garb it has been shrouded under.
“We clearly see marketers relying less on traditional advertising going forward and increasing their spend on customer experience, commerce and technology. Outside of FMCG, the shift is happening faster. Agencies of the future need to be able to provide full-funnel marketing services support to clients. At present the industry in India is still over indexed on communications but the growth is all going to be from the other three pillars. We see the current split of approximately 70 per cent skewed to communications to move towards an equal split over the next couple of years,” Srinivas explains.
While ‘communication’ leads in India, WPP has already taken several steps for the latter three experience, commerce and technology to grow at a faster pace. Genesis BCW’s Chief Executive Officer and Founder, Prema Sagar, explains communication as the “ability to shape-shift according to the needs of an organisation”. She says, “It isn’t just one thing. It can be any number and type of engagement channels that a company can deploy to communicate with any of its stakeholders. Whether it is traditional public relations, digital marketing, government relations, creative content, or even paid promotion, communications take on all this and more, delivering an integrated solution.”
Technology is another area where India has already taken significant strides. In his India visit, Read had said that WPP is working on making India its global technology base. He has parked this under the ‘opportunities’ tab. This is not a surprise as India already is home to several global hubs for the company. These include WPP Commerce, Wunderman MSC, Verticurl and Pennywise, all of which are in marketing automation, AKQA in tech-led innovative solutions, Hogarth in content production, and several Kantar hubs for data and analytics.
GroupM South Asia’s CEO, Prasanth Kumar, points out that this supreme focus on new practices is in response to both marketplace changes and marketer expectations. He elaborates, “There has been an evolution in the marketplace due to technology changes. We have seen how the ecosystem has moved from connected consumer to connected commerce. As the importance of data and technology increases, we will witness an increased overview of tech augmentation in decision making by marketers. There is also a heightened sense of accountability on ROI (return on investment) amongst clients.”
Simpler Always Better
In their quest for accountability and higher ROI, marketers globally and in India are looking at complex company structures with disdain. By its own admission, WPP has become too “unwieldy, with too much duplication”. As a result, it is not always as focused or as fleet of foot as it needs to be to satisfy marketer needs. In order to change this, central to the new strategy is a simpler structure, based on three principles – clients, companies (implying lesser but stronger agency brands) and countries (explaining this as deeper integration in individual markets).
While all of its efforts are client-centric, WPP also speedily moved towards decreasing its number of brands by a multitude of methods including mergers and rebrands. The most notable were Wunderman Thompson and VMLY&R. While WPP had announced its intention to do this in the last quarter of 2018, the new structure came into play in 2019. Wunderman, a hitherto digital and direct brand and J. Walter Thompson were merged, and digital agency VML was merged with Y&R. Was marrying creativity and technology really as simple as merging a creative and tech brand? The WPP global chief solemnly believes that the move was the “right way to signify the future direction of the company and for the people”.
His opinion is seconded by Wunderman Thompson’s South Asia Chairman & Group CEO, Tarun Rai. “For our clients, our offering of ‘end-to-end solutions’ is no longer a claim, it is a reality,” explains Rai, adding, “We are, now, able to offer our clients the complete range of services to help them engage with the consumer through her entire consumer journey. We are working with our clients to drive data driven campaigns that not only help them target the consumer at different stages of the consumer journey but also feed them the kind of communication that would work at each stage.”
Some of the recent work from the merged entities, including for Mumbai Mirror and Pepsi, saw creative solutions that employed everything from content and different forms of digital to print and TV.
“For our employees, the merger means an opportunity of enhancing their skillsets. We are investing time and resources in upgrading the skills of our people through continuous training programmes. For us as a company, the merger allows us to start new conversations with our clients and open new revenue streams. It also enables us to attract a new talent pool which was earlier going to digital companies,” Rai adds.
Creativity First Agenda
Throughout 2019, WPP has been aggressive in stressing its creativity-first agenda at every opportunity it got. At the beginning of the year, Mark Read had put ‘North America’ and ‘creativity’ as the two top priorities in his own agenda. From a WPP perspective, creativity is not the responsibility of anyone individual or brand, but a continued pursuit embedded in the company DNA.
Srinivas puts this in the Indian perspective and explains, “We have great talent that resides in our more established agencies and some exciting talent that has come on board with the acquisitions of The Glitch, Autumn and the scaling up of VMLY&R. We are supporting our agency brands by giving them access to partners, data-led insights for content development and organising sessions to push the envelope on creativity.”
The Glitch would be an example of WPP’s investment in a younger, faster creative brand. “We’ve always focussed on delivering world-class creative with uncompromising agility and efficiency. WPP has helped us further enhance this by not just expanding our data capabilities but also scaling our client relationships in India and globally,” comments Pooja Jauhari, CEO, The Glitch.
By re-thinking how planning works in the digital age, The Glitch sees data as the biggest tool in a creative arsenal. The agency brought all forms of content creation in-house, blending design-production and technology, and applies its creative commerce practice to make products move. It is exactly this end-result for marketers that has guided the likes of Ogilvy ever since its inception.
India A Leader In Global Creativity
Under Piyush Pandey’s leadership, which has always been outcome focussed, Ogilvy married scale with great work, creating a legacy that is difficult to replicate. It may have been a matter of pride for India but was in line with global expectations when Pandey was named the global Chief Creative Officer of Ogilvy in December 2018 in addition to his mandate as Executive Chairman for Ogilvy India.
Pandey says messaging should be communicated in the manner people want to receive it, and not from the perspective of marketers or ad landers. “All along we have tried our best to do this in its simplest and most interesting form, be it with Fevicol, Asian Paints, Cadbury’s and all our other clients. We have led the industry in terms of the kind of people that we show in our communication from plastic models to real human beings,” he says.
Wearing his global CCO hat, he says, “This thought process works the same way everywhere in the world. My job is to encourage every good storyteller and leader in every country to say it in their own fashion, in their own way, in the most relevant manner for their audiences. I do not believe in enforcing my theories on people who are better equipped to talk to their nation than I am. And I am fortunate to have many such people around the world. I respect them and I learn from them.”
Pandey points out that marketers want people to receive their story and look forward to the next one in the most cost-efficient fashion. “Their story has not changed ever, from the guy who sells chana jor garam (roasted chickpeas) on Marine Drive to the guy who sells hotdogs on Times Square,” he says, “people like me will come and go, new media will come and change, but the story will not. So, enjoy the game.”
With brands as constitutionally divergent as Ogilvy and The Glitch, these being only two of several hundred cases in point, leaders such as Read globally and Srinivas in India are faced with an intense challenge of making all move in the same direction. Global leaders, including Unilever CEO Alan Jope, have already begun asking for partnerships at a holding company level than just at an individual brand level. The changing marketplace requires structures that can customise efficiently, and naturally, to the needs of individual marketers.
Reasserting that the attempt is to give marketers the “best of both worlds”, Srinivas informs that WPP has created integrated teams for some of its key clients over the past year. He adds, “These structures are bespoke, fit the client need and mirror the client’s marketing organisation. In some cases, we have a hub and bespoke structure where the WPP Hub is positioned as a growth hub for the client, adding strategic value to help grow the business. The rest manage all day-to-day operations, campaign development, media etc. They work together with the Hub to ensure all parts add up to move the needle on business.”
WPP also has a fully integrated team where all specialists sit together as one agency. This is easier in cases where WPP agencies handle all the marketing services functions for all brands of the marketer. A third variant is a combination of a fixed and fluid-structure. “Whatever the model may be, the one thing certain is we are driving a lot more collaboration across the board,” states Srinivas.
A Culture of Collaboration
Creating a culture of collaboration has multiple dimensions. If driving synergy to pull in one direction is one aspect, another is something as tangible as location. As part of its global growth strategy, WPP is investing in two co-location campuses in India. The rollout commenced with more than 3,800 people moving into a new Mumbai Campus in August, while a Gurugram Campus will be set up next year.
“Having modern, dynamic workplaces creates real impact for our people, and enables collaboration and ideas to thrive,” says Read. WPP is also making it easier for its people to better integrate and connect with its partners, which is yet another aspect to a culture of collaboration.
“Our new campus in Mumbai, called BAY99, has a 50-seat incubator space where we are inviting partners and startups to come to sit with us. This is another initiative aimed at changing mindsets and exposing our colleagues to the latest technology,” informs Srinivas. Srinivas, who prior to his mandate as WPP Country Manager was the boss for GroupM South Asia, had always put a premium on collaboration with industry partners. This working style can now be seen at the WPP level. A recent example would be when WPP and InMobi Group entered into a long-term strategic partnership in October 2019 to build benefits for marketers.
Leveraging expertise from InMobi Group and WPP agencies, the partnership aims to simplify complexity for Indian marketers and create personalised consumer experiences at scale. Experiences are one of the four focus areas of WPP’s new strategy and vindicates that WPP is going all out in its new strategy.
Reskilling For Future Readiness
Srinivas credits growth to WPP’s India workforce. He asserts that talent development has always been integral to WPP’s strategy to grow and stay future-focused. WPP has formed an HR Leaders’ Council with the representation of all its agency brands.
Some of our agencies like GroupM have created fantastic platforms for Learning and Development which we plan to leverage across the wider group. Our partners will also play a role in upskilling our talent. Many of them have been actively involved in our training programmes,” informs Srinivas.
Numbers do show that GroupM has in the last few years made significant strides towards creating a future-ready workforce. In 2013, only 37 per cent of the employees were equipped with knowledge of the new core. By 2019 this number increased, where almost 62 per cent of employees have now advanced and started to pursue key marketer engagements across content, data, technology, analytics, digital and activations. As a step towards the future, GroupM and the agency brands got together to create the Organisational Transformation Programme and created the GroupM 3.0 Vision, which is to be a data-centric and digitally charged agency of the future.
“GroupM understands the need to transform our workforce. We are very committed towards continuously building capabilities in our talent and therefore, we have made significant investments in learning and development which helps us in further upskilling our workforce,” states GroupM’s Prasanth Kumar. He cites another example of GroupM Champions League established earlier this year.
He explains, “This is the largest talent development initiative in 2019. It is a programme that covers every GroupM employee, with over 40 unique modules and employees distributed in various cohorts designed to provide customised learning journeys for everyone depending on their role.”
What Doesn’t Kill You…
It will not be wrong to say that WPP was caught between all kinds of unenviable situations in 2018. The global leadership, however, did not allow itself to be pressurised into any corner. A clear example of this were the conversations, and the subsequent stake sale of Kantar. This would be a first of sorts where WPP was not keen to own. In an industry forum, Read commented that owning first-party data was not nirvana, arguing that marketers care about using data in marketing but not whether WPP owns it or not.
In December 2019, WPP completed the sale of 60 per cent of Kantar to private equity firm Bain Capital and would return about $1.2 billion to shareholders via a share repurchase programme. The completion of the transaction achieved its objective set out in December 2018 to strengthen its balance sheet. It also substantially completed its disposal programme. “This is a major step in simplifying and focusing WPP. The partnership with Bain Capital means that we will participate in the future growth of Kantar as well as allowing our clients to continue to benefit from Kantar’s services,” says Read.
Kantar too would be moving to the WPP campus in Mumbai. “Kantar has always had a close, symbiotic relationship with other WPP companies in India. This collaboration will continue even after the ownership changes as the relationship is based on mutual respect and mutual benefit, not on ownership pattern,” adds Preeti Reddy, CEO, Kantar Insights South Asia.
One year from the three-year timeline is over for the champion that has long ruled the advertising and communication world. While there are signs of recovery after suffering repeated blows, WPP remains cautious, staying the course. However, WPP is confident of India’s performance in the time ahead. In 2020, India is expected to face challenges and uncertainties across sectors, just like other markets. However, this also brings opportunities for brands to innovate. Propelled by greater use of technology and better content across media, the year ahead promises to be an interesting one for all ad landers.