- WPP’s GroupM is in the midst of a multiyear transformation plan.
- The hugely influential ad buying division has lost ground to rivals this year.
- It has a plan to simplify its business, but that could make some senior leadership feel depowered.
WPP’s media investment division GroupM has grown by more than 23% since Christian Juhl took over as global CEO in 2019, but it has struggled this year, losing more than $1.6 billion in business to competitors in the United States alone, according to research firm COMvergence.
GroupM is in the midst of a multiyear plan to simplify its business in order to sharpen its competitive edge. The company has 82 markets around the world, 44,000 employees, and is responsible for placing $63 billion in media dollars annually.
GroupM will allocate budgets and resources solely on a country-by-country basis beginning next year as it transitions to a country-level profit and loss model, Juhl confirmed to Insider.
While GroupM has always had country-level profit and loss statements, it previously allowed its individual agencies — EssenceMediaCom, Wavemaker, MSix&Partners, and Mindshare — to be in charge of their own budgets.
This is the latest step in Juhl’s plan to have these various media agencies follow similar business practices across all of GroupM’s markets. GroupM centralized media delivery within a unit called Nexus and all of GroupM’s data and technology within a unit called Choreograph under Juhl. In practice, this means that if one agency has a useful technological solution, other agencies may be able to use it as well.
“Our strategy is more about everybody realizing they cannot harness the power of technology, single systems, and processes on an individual market or brand level — it has to be done on an enterprise level to get the benefit of the collective intelligence,” Juhl said in a statement.
Individual agency heads will continue to be responsible for client growth and profitability, but the elimination of their P&L responsibilities is expected to increase efficiencies across the group and free up more time to focus on client strategy, according to Juhl.
While Juhl downplayed the importance of the P&L shift, a former executive at rival ad firm Publicis Groupe, which went through a similar process several years ago, said it could help the business but roiled agency leadership ranks.
This person said that when Publicis Groupe did it, it allowed agencies to pull talent and resources from different parts of the organization without having to figure out which balance sheet it should be charged to or how bonuses should be divided between different agencies when they work together on a project.
Owning the P&L, on the other hand, can be a “enormously emotive” topic, according to this person, and some agency leaders may feel as if their power and responsibility are being diminished — and their performance is less visible to senior leadership.
“It did get them to a better place,” the former Publicis executive said. “But a lot of people ended up leaving.”
Juhl believes that his strategy to simplify the business and standardize training and other processes will provide employees with more career opportunities because job transfers will be easier within GroupM.
“There’s a lack of scaled talent in the industry, especially as we go through yet another iteration of moving into AI and technology and software enablement — that’s yet another skillset we have to bring into the modern agency system and that is a challenge,” Juhl said.
Despite the company’s efforts to streamline its operations, Juhl stated that GroupM’s individual agency brands will continue to operate as separate entities rather than as a unified media group.
“Sometimes, agency brands reflect the culture of the clients with whom they’ve grown up.” So EssenceMediaCom has a Google feel to it, while Mindshare has a Unilever feel to it,” he explained.
GroupM must also deal with other challenges. Juhl is also dealing with the fallout from a police investigation into bribery allegations within its China unit, and he is looking for a new North America CEO after Kirk McDonald announced last month that he will leave the company by the end of the year.
WPP announced last month that more information about its plans to simplify GroupM will be revealed at its Capital Markets Day in January.