WPP has revealed plans to restructure the holding group and cut £500 million in costs as the company’s CEO Cindy Rose attempts to address a decline in growth.
The restructuring is expected to include job cuts and the merging of its advertising agencies, setting up a stand-alone AI transformation division and restructuring the group into four regions: North America, Latin America, Europe, the Middle East and Africa, and Asia Pacific.
The plan, a part of a massive transformation titled ‘Elevate28’, will restructure the model into a single operating company with four pillars: Media, Creative, Production and Enterprise Solutions.
The company’s ad agencies – which includes the likes of Ogilvy and VML – will be merged under its new WPP Creative division.
Rose also plans to achieve savings of £500 million by 2028, some of which is expected to come through job cuts.
Rose said the restructuring plans will make WPP more “integrated” and “fit for the future.”
A Fall in Profit
WPP has reported declining revenue and profit in recent years, and towards the end of last year was relegated from the FTSE 100 after almost 30 years.
The company said it experienced a 3.6 percent decline in revenue compared to last year and a significant fall in profit of 26 percent to £1.1 billion.
This follows WPP losing some key clients to rival Publicis Groupe last year, including the $1.7 billion global account for Mars and a significant portion of Coca-Cola North America.
Fellow holding company and rival Omnicom announced its plans to save $1.5 billion, mostly through job cuts, following its acquisition of Interpublic Group (IPG).
Going All In On AI
The restructuring could be considered a defensive move from WPP against the disruption of AI – including clients moving marketing functions in-house.
In its Elevate28 announcement, WPP outlined that a “significant portion” of the £500 million cost saving would be reinvested into AI technology. The company recently increased its annual AI investment to £300 million.
As well as its AI operating system WPP Open, the company is also offering an AI-focused consultancy service through WPP Enterprise Solutions – a new division tasked with helping clients navigate AI.
