Advertising giant WPP is set to cut around 3,500 jobs worldwide and shut or merge almost 200 offices as part of a radical restructuring plan, announced today during a lengthy presentation for investors. The group has had a tumultuous year which has included the departure of founder and chief executive Sir Martin Sorrell, who resigned following accusations of improper conduct and misuse of company resources.
The restructuring, which will cost the firm £300m over the next three years to carry out, will see WPP close 80 offices globally and combine operations of a further 100 in slower markets. The company currently boasts more than 3,000 offices in 112 countries, with 400 ad businesses operating under its umbrella. The job losses represent around 2.6 per cent of the group’s current workforce of 134,000, and with plans announced to refocus on its roots, the firm also plans to hire 1,000 creative staff, reducing net job losses to around 2,500.
“What we hear from clients is very consistent: they want our creativity, and they want us to help them transform their business in a world reshaped by technology. This is at the heart of what we do,” said Mark Read, chief executive of WPP. “We are fundamentally repositioning WPP as a creative transformation company with a simpler offer that allows us to meet the present and future needs of clients. This more contemporary proposition has already helped us to win new business, including Volkswagen’s creative account in North America.
“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. As well as improving our offer and creating opportunities for clients, this investment will drive sustainable, profitable growth for our shareholders. We describe our approach as ‘radical evolution’: radical because we are taking decisive action and implementing major change; evolution because we will achieve this while respecting the things that make WPP the great company it is today.”
According to WPP, the changes will ultimately save the group £275m a year by the end of 2021, half of which will be reinvested in the business. In reaction to the news and an upgrade to the company’s full-year sales guidance, WPP’s share price rose more than six per cent, although some city analysts reportedly remain sceptical. In October, WPP lost around 20 per cent of its market value after missing its forecast of third-quarter sales and downgrading its full-year guidance.
At the end of November, WPP announced that one of its largest and oldest agencies, J. Walter Thompson (JWT) was merging with digital specialists Wunderman in an effort to simplify its business. Read had previously said that the group had become “unwieldy with too much duplication”, while clients had reportedly criticised WPP as becoming difficult to do business with due to the sheer scale of the firm.