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WPP accelerates strategy reset amid weak ad spending

Bloomberg

WPP PLC chief executive Martin Sorrell addresses delegates at the annual Confederation of British Industry conference in London on Nov. 21, 2016.

Photo: AFP

WPP PLC, the world’s largest advertising company, is accelerating a strategy revamp to cope with continued weak ad spending by its clients.

The London-based company reported a “slow start” to this year and a no-growth outlook for the year after a tough last year, when revenue and profit margins were also flat.

WPP is trying to break down silos among its various creative, ad buying, strategy and public relations businesses to draw on top talent and seamlessly serve clients.

Its advertising sales are a bellwether of strength in the global economy, as companies tend to expand or cut their marketing budgets depending on how well their businesses are performing.

After “not a pretty year” last year, WPP is “upping the pace” of its effort to combine its global team, CEO Martin Sorrell said.

“In this environment, the most successful agency groups will be those who offer simplicity and flexibility of structure to deliver efficient, effective solutions — and therefore growth — for their clients,” he said.

WPP said in a statement that like-for-like revenue last year was down 0.3 percent.

It is also facing questions over whether it risks losing business to new challengers.

On one side, consultants like Accenture PLC and Deloitte LLP have been buying up creative businesses in a bid to poach digital marketing work, such as Web site design and app-building.

On the other, the likes of Facebook Inc and Alphabet Inc’s Google increasingly offer advertising solutions direct to companies, threatening to cut out the agency middlemen.

In response, WPP has been doubling-down on a drive for “horizontality,” its attempt to better integrate its many services and divisions so clients can access the best of what it offers in one place.

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