Embattled WPP has some good news to report after the UK government announced it expects to hand its £1.5bn strategy, planning and buying business to the agency following a stand-off with rival and incumbent Omnicom.
The account runs over four years, and will be music to the ears of WPP investors, who saw the firm relegated from the FTSE 100 after nearly 30 years last week, as the British advertising giant struggles to stem an exodus of clients and match the artificial intelligence and data capabilities of rivals.
The deal isn’t set in stone just yet, as all such Cabinet Office decisions are subject to a standstill period during which bidders are notified and are able to challenge the decision.
The UK government is also expected to announce that M&C Saatchi, Havas and Unlimited (in partnership with Pablo) have landed the bulk of its creative business.
The media move, if ratified, is a big boost for new WPP CEO Cindy Rose as she tries to steady the ship at the ad behemoth and calm constant takeover chatter.
WPP’s recent troubles saw its stock price slump to to its lowest level in 27 years in late October, after the group missed forecasts again at its latest quarterly results, taking its market capitalisation from a £25bn high eight years ago, when it was the world’s largest marketing services company, to around £4bn today. It is facing a slew of US lawsuits as a result, as well as losing key clients including Mars.
CEO Cindy Rose has labelled WPP’s recent performance “unacceptable” and said “we are taking action to address this.” WPP recently appointed management consulting firm McKinsey to advise on its much-anticipated strategy review.
Recently-appointed chief executive Rose, along with chair Philip Jansen, have also recently combined to buy back a total of 100,000 shares for around £287,000. The move appeared to be designed to lift investor sentiment with regard to the company’s struggling stock, although this in itself has raised further questions as UK corporate governance rules prohibit such buybacks if a public company is in formal merger or takeover discussions.
