Advertising agency WPP sent out a press release this morning reporting on their Preliminary Results. Sir Martin Sorrell, CEO of WPP went on to say:
“2017 for us was not a pretty year, with flat like-for-like, top-line growth, and operating margins and operating profits also flat, or up marginally.
“The major factors influencing this performance were probably the long-term impact of technological disruption and more the short-term focus of zero-based budgeters, activist investors and private equity than, we believe, the suggested disintermediation of agencies by Google and Facebook or digital competition from consultants.
“In this environment, the most successful agency groups will be those who offer simplicity and flexibility of structure to deliver efficient, effective solutions – and therefore growth – for their clients. With this in mind, we are now accelerating the implementation of our strategy for the Group.
“No company in the world of marketing or business transformation has a greater or more varied repertory of talent and capabilities than WPP. Our strength, however, resides not only in the scale and variety of those skills, but in our unique ability to combine them in service of our clients’ growth – which is why most of the world’s leading companies choose WPP to provide them with communications services.
“For many years we have placed ‘horizontality’ at the heart of our strategy by presenting clients with tailor-made and seamlessly integrated offers to meet their specific requirements. Over the last year, we have begun to apply that philosophy to the structure of the Group itself by simplifying a number of our operations.
“As our industry continues to undergo fundamental change, we are upping the pace of WPP’s development from a group of individual companies to a cohesive global team dedicated to the core purpose of driving growth for clients.
As a result shares fell 14% which wiped out $2.6 billion from the company’s market cap. This is a big story that will have an impact not just on the advertising industry, but will also the public relations industry. With so many advancements in technology WPP has been forced to change how the agency does business, as well many brand such as Procter & Gamble and Unilever moving towards major consolidation on the number of agencies they work with.
Will this have an impact on other advertising agencies – absolutely.