What you need to know:

• In his first half-year result with WPP AUNZ, boss Jens Monsees has forecast cost savings of $70 million for full year 2020 and predicted costs in 2021 will be $80 million to $100 million lower than in 2019.
• Competitors claim the local group’s earnings are being propped up by the federal government’s JobKeeper payments.
• WPP AUNZ reported JobKeeper payments of $6.6 million for the six months to 30 June and earnings before interest and tax of $13.3 million.  
• Monsees told Mi3 that the group generated much of its cost savings from de-duplication, automation of some roles and lower real estate costs.
• He says the de-duplication of roles and capabilities has also provided WPP the opportunity to accelerate its transformation process.
• Monsees says the development of its centre of excellence in tech, data, IT and consulting is already generating “large-scale” project opportunities for clients.
• He says the current business model is still 70% dominated by “traditional” media and marketing work.
• However, in the next three years, Monsees expects that to become a 50/50 split between traditional work, and tech and CX.
• The WPP CEO also rejected claims of internal tension regarding his transformational strategy and leadership.
• Industry rumblings have been growing that senior executives in some of WPP’s key businesses have become unhappy about Monsees’ leadership and the way in which the tech-led transformation is being managed.
• Monsees acknowledged there were some who “couldn’t make the jump” but said there were countless others “excited to make the change”.

WPP’s cost saving success

At its annual general meeting in May this year, Australia’s largest advertising and communications holding group WPP was forecasting, at worst, a $10 million loss for the six months to 30 June and, at best, a breakeven result.

A further guidance update was made in July and in August earnings before interest and tax came in at $13.3 million for the June half, down 61.5% on the same period last year with net sales declining 14.3% to $296m. 

Newly minted WPP AUNZ CEO Jens Monsees also reported cost savings of $28 million for the June half, with full year savings forecast at $70m and said costs in 2021 will be $80 million to $100 million lower than in 2019.

The results come at a time where Monsees is accelerating his plan to turn the WPP ship in a new direction, with tech, data and consulting leading its future growth plans.

Speaking to Mi3, Monsees says the COVID crisis had only strengthened the company’s resolve to move into these areas.

Despite industry competitors claiming WPP's profits had been propped up by the government’s JobKeeper payments, the holding group CEO says it has more to do with de-deduplication of group roles and functions and office consolidation.

He says JobKeeper acted as $6.6 million subsidy for first half 2020.

“We are not looking at JobKeeper as a strategic contribution, but obviously we are entrepreneurial and if there is something that we can use to our benefit, then we will utilise that opportunity,” Monsees says.

“Let's be honest, [JobKeeper] will end but we are very confident that with our new streamlined cost base that we won’t need the program going into 2021 because we are strong enough to generate our profit ourselves.”

Monsees says the de-duplication of roles across IT, finance, legal and HR was a significant contributor to the $70 million reduction in costs.

Part of his strategy has been to remove silos around the major agency brands and implement a campus model, which Mi3 revealed earlier this year.

The move has seen the heads of many departments, which are housed in separate agencies, change reporting lines from their direct CEOs to the regional heads for each sector.

“Our agencies had been too siloed and independent from each other, so we changed reporting lines, which has given us a more connected view on how each area of the business is working and what synergies can be made between each agency,” Monsees says

“This has allowed us to put clients at the centre of our focus, rather than our own agencies, as we now understand there is no one agency brand that can deliver on the end-to-end customer journey solution.”

Internal discord

It may not be all smooth sailing in Monsees’ plan for a tech evolution, however, with industry insiders claiming that internal rumblings have escalated over his leadership.

The tension is said to be around Monsees leadership approach and the move away from what he describes as “traditional communications revenue”.

Of the $296 million in WPP's first half revenues, its global integrated agencies accounted for $202m, down 12%. Monsees is banking on his new centralised tech unit, which resources the group's agency brands, to deliver new growth as traditional communications work faces more pressure. But a combination of change and Monsees' leadership style is said to be creating ongoing friction and "a lot of unhappy campers" inside the business. The situation is now widely discussed across the agency sector but Monsees says it's more to do with people who have left the business.      

“On a transformation journey like this, you have a lot of strong talent that is now empowered and driving the change together within our leadership team,” Monsees says.

“Of course, there are those who are not able or wanting to change and wish to stay with the traditional model. Those individuals have been vocal since their departure, but we are now more focused then ever as a team on executing this change.”

Monsees says 70% of WPP AUNZ’s revenue comes from traditional revenue sources including creative campaign work and media trading and buying.

He wants the holding group to reach a 50-50 split of tech-driven and traditional revenue over the next two to three years. The implementation of a centre of excellence that links tech, data and consulting talent across the group is a key part of his plan to realise that ambition.

The push into technology-led services like e-commerce, marketing automation, customer experience deployments, business data and analytics and alliances with tech players like Adobe, Salesforce, Microsoft, Sitecore, HubSpot, Oracle and Google's marketing cloud is fast becoming table stakes for many of the holding companies.

However, Monsees says WPP is hitting the accelerator harder than its rivals and is making key appointments to support the changes.

In July, WPP AUNZ announced the appointment of Tim Matheson to the newly created role of Chief Technology Officer. Matheson took on the new role after 15 years at WPP AUNZ’s specialist digital agency AKQA, which is a key part of Monsees’ strategy.

WPP's boss says his rival holding groups are not the benchmarks for what he is trying to achieve.

“I'm not looking so much at the other holding companies, but I'm looking at the IT implementors like Deloitte or Accenture,” Monsees says.

“They are the ones making money out of the tech side of what we do but often only offer one part of the entire solution and step away after everything is built.”

Monsees says this often leaves a client with a “fantastic tech solution” but with “nobody trained to pilot it”.

“The power of WPP is that we not only can consult on what is the right solution and tech stack, but we can also implement it through our agencies and then operate it going forward,” he says.

“That puts us in a better place to advise and assist clients throughout the entire process. Combined that with our immense pool of talent and what you have is a connected, tech agnostic media and marketing business built for the future.”

Earlier this week, Monsees was also forced to rebuff claims that WPP was posting false job ads, with the holding group CEO telling Mi3 the business had come out of its hiring freeze.

He said the business was now able to hire for roles that were applicable to his growth strategy. Many of these roles were advertised for WPP's media and investment arm GroupM.