Creative agencies have taken the brunt of WPP’s efforts to save its business, but the real risk is media agencies. The group’s attempt to kickstart growth revealed as much with a plan it hopes leaves it less reliant on the margins it made on the media budgets of advertisers.
It’s harder to make the same sort of money now when larger advertisers are placing more focus on media value and performance and less on cost. Media deals are going to be predicated on both the price of the audience and the value of the data generated from that buy, said WPP CEO Mark Read yesterday, as he outlined how the group will bounce back from a downturn that’s battered its share price, forced it to cut thousands of jobs and made internal upheaval a necessity. Technology, not media, will grow WPP under Read’s plan, while a renewed approach to creativity will be how its agencies set themselves apart from rivals.
Advertising and media services account for 75 percent of WPP’s earnings, but there’s more emphasis on the commerce, technology and experience parts of the business that generate the remaining 25 percent. Some advertisers believe they don’t need the buying power of the agency networks for biddable media as the right price for the likes of display and search is more a function of data they own. It’s why WPP’s CEO believes there’s $100 billion opportunities in those newer areas that could deliver between 5 and 10 percent of growth for the group.