Madison Avenue will look different after the coronavirus pandemic, which has disrupted not only marketers’ budgets but also accelerated advertising holding companies’ plans to pivot away from TV commercials and push even harder into new services to find growth.
PLC plans to expand its commerce, technology and experience capabilities from 25% of its business to 40% by 2025, the company said Thursday during a presentation to investors.
Potential revenue from client spending on technology, commerce and experience services is expected to grow 10% annually across the industry, while the communications segment, including traditional advertising, is only expected to grow about 1%, Chief Financial Officer
The company, which owns creative agencies VMLY&R and Wunderman Thompson as well as ad-buying conglomerate GroupM, also said it plans to invest in talent and technology. It will spend between £200 million and £400 million, equivalent to between $270 million and $540 million, on mergers and acquisitions annually, a small increase from recent levels, Mr. Rogers said.
WPP’s new investments will be aided by expected gross annual cost savings of £600 million by 2025, according to the company. WPP in recent years has consolidated a number of its creative and digital agencies to create a simpler structure, prioritize digital offerings and combine service offerings for clients rethinking how they reach their customers.
“Rather than acquiring a legacy business, we want to make sure clients can get the most from their data,” Chief Executive
said during the presentation.
WPP has not been immune from clients’ budget cuts and shifting priorities during the pandemic as marketers raced to reach homebound consumers. The company in recent months implemented voluntary pay cuts and furloughs for some of its own employees.
Other ad holding companies are navigating the same currents.
which owns creative agency McGarrybowen and ad buying shop Carat, this month announced a reorganization that will consolidate its portfolio of businesses from more than 160 brands to six global brands within two years in an effort to simplify operations and create more integrated tech- and data-focused teams. The reorganization will likely result in a 12.5% reduction in total head count across Dentsu, subject to local regulations, the company said at the time.
Dentsu attributed some changes to the unprecedented impact of the pandemic on 2020 revenue amid a slowdown in demand for services, as well as continued uncertainty and a need to refocus on higher-growth businesses.
Dentsu this year agreed to acquire the remaining stake in customer-relationship marketing firm Merkle that it did not already own, as it increasingly prioritizes the data-oriented offerings over traditional marketing services.
“Our strategy of Integrated Growth Solutions is the center-point of our vision, with particular focus on the strongest growing sectors, digital solutions and customer experience management,” the company said in a release outlining the latest changes.
Write to Alexandra Bruell at [email protected]
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