WPP to slash 3,500 jobs as it launches new streamlining strategy
Advertising group WPP is cutting 3,500 jobs as it restructures the business and shifts its focus to technology in a bid to stave off competition from tech giants.
WPP today said it will spend £300m over the next three years as it simplifies the business, aiming to make annual savings of £275m by 2021.
The company will make the savings by closing under-performing offices and cutting overlapping jobs.
A spokesperson for WPP said 3,500 jobs would be cut, but said the firm will hire 1,000 new employees as it shifts its focus to technology. In addition, the company plans to close 80 offices worldwide and merge a further 100.
WPP said it expects to return the company to growth in line with competitors, aiming to achieve an operating profit margin of at least 15 per cent by 2021.
It said it expects like-for-like revenue for the full year to be down roughly 0.5 per cent, which is at the more positive end of its previous forecasts.
The company laid out its new strategic plan this morning ahead of an investor day at its headquarters in London.
The new strategy comes as the world’s largest advertising business grapples with increased competition from tech giants such as Google and Facebook.
WPP’s share price has fallen almost 40 per cent this year and the firm reported a 0.8 per cent fall in revenue in its third quarter trading update.
During a turbulent year the company has seen the departure of founder Sir Martin Sorrell and the loss of several lucrative clients.
WPP has already taken steps to simplify its corporate structure, with mergers leading to the creation of new agencies VMLY&R and Wunderman Thompson.
In a statement the company acknowledged the need to streamline its complex structure, saying: “WPP has become too unwieldy, with too much duplication.”
The ad giant has already revealed its intention to sell a majority stake in its data analytics division Kantar. It said today a deal is likely to be announced in the second quarter of 2019.
“The restructuring of our business will enable increased investment in creativity, technology and talent, enhancing our capabilities in the categories with the greatest potential for future growth,” said chief executive Mark Read.
“As well as improving our offer and creating opportunities for clients, this investment will drive sustainable, profitable growth for our shareholders.”
WPP’s shares were up over four per cent this morning following the announcement of the new strategy.
George Salmon, equity analyst at Hargreaves Lansdown, said: “Simplifying a business that had become sprawling, to put it mildly, while simultaneously focusing on helping clients work with new retail giants like Amazon and Alibaba, seems a sensible strategy to us.
“However, whether the new approach will be enough to counter the severe disruption facing the business is another question entirely.”