WPP axes 3500 jobs as new boss vows to simplify ad giant

WPP chief executive Mark Read on Tuesday admitted that the business had become “unwieldy” as he set out a “radical evolution” to bring it to heel, a plan that will cost £300 million and lead to 3500 job cuts.

Industry criticism of WPP under Sir Martin Sorrell had it that the company was so sprawling that it was frequently competing with itself for trade.

Read on Tuesday confirmed that diagnosis, saying the ad giant was “too unwieldy, with too much duplication… as a result, it is not always as focused or as fleet of foot as it needs to be”.

The £300 million cost over three years will pay for property closures and redundancies. The 3500 jobs will be lost from a total of 134,000 in 110 countries. Around 1000 new jobs, probably in digital roles, will be created, and acquisitions are on the agenda.

Read said that WPP will be “buying things we don’t have, rather than buying a new version of what we’ve already got,” in what seems to be a clear swipe at Sorrell. WPP says that it will save costs of £275 million a year by 2021.

Read said he didn’t recognise industry gossip which claims WPP is losing staff and clients, confirming that the business’s top 20 staff members have not moved to rivals.

However, in October WPP did lose its decades-old creative account for Ford to Omnicom — a big loss.

The dividend will be held at 60p and growing it — rather than share buybacks — will be the priority. This reassured the City somewhat. Shares rose 35p to 840p. Broker Liberum declared: “new strategy in right direction, but WPP could have been more bold”.

WPP confirmed that it is in talks to sell a majority stake in market research business Kantar, which could raise £2 billion to cut debt. The firm is valued at £3 billion.

The shake-up will see 100 offices merged and a further 80 closed. The well-known advertising brands such as Ogilvy and J Walter Thompson will be retained.

Traditional ad agencies are under intense pressure from Google and Facebook. Read said that the industry is facing “structural change not structural decline” and that WPP will adapt “at speed”, to become “even more client-centric”.

Sorrell left this year after allegations he used company money to pay for prostitutes — something he denies — and a fall-out with chairman Roberto Quarta.