• Now media giant GroupM finds itself focus of WPP restructuring drive

    Now media giant GroupM finds itself focus of WPP restructuring drive

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    WPP’s GroupM media operation, once a dominant force, is now undergoing restructuring, similar to what has happened with the company’s creative agencies. The various media agencies under GroupM, such as EssenceMediacom, Wavemaker, Mindshare, and MSix & Partners, are no longer managing their budgets individually; instead, spending is now allocated on a group-wide basis within each country

    This raises the question of whether WPP is moving towards consolidating its media agencies into one major entity, possibly named GroupM or WPP Media, with the current brands becoming mere labels. WPP, which is attempting to cut $125 million in costs following disappointing financial results, now has only two major creative agencies: VML and Ogilvy.

    GroupM’s leader, who joined WPP when it acquired Essence, states that this restructuring aims to allow leaders more time to focus on efficiencies and strategic planning. However, achieving this may be challenging without direct control over the budget.

    There has already been a noticeable exodus of senior personnel, a common method for holding companies to reduce expenses. GroupM North America’s leader is departing, and several others, including the chief growth officers of Mindshare and Wavemaker, the chief commercial officer of Wavemaker, and the chief people officer at GroupM, are reportedly on their way out.

    The end of the year is typically a period when senior executives leave, often going unnoticed, and more departures are likely. GroupM’s media agencies seem to have lost their edge, with more pitch losses than wins and trailing behind competitors like Publicis and OMG. Their business model may also be suffering from increased client scrutiny of the various ways media agencies, still the largest revenue source for holding companies, generate income.

    WPP appears to be slowly adopting a model similar to Publicis Groupe’s ‘Power of One,’ though Publicis’ leadership seems more comfortable maintaining multiple brands under central control than WPP’s leadership.

    A broader issue exists for WPP’s current CEO. The previous strategy under WPP’s former leader was to focus on being the largest, with the belief that big clients would naturally follow, a strategy that previously worked well for GroupM. The approach was similar to the one used by Saatchi: being number one is ideal, number two is acceptable, but being number three is problematic.

    While WPP remains the largest in terms of headcount and revenue by some measures, its market value is now less than half that of Publicis. WPP might need to downsize to regain its footing.