LONDON (Reuters) - The COVID-19 pandemic is forcing the world’s biggest advertising company WPP (WPP.L) to accelerate its strategy of bringing its multiple agencies together to produce work more quickly for clients battling to cut costs.
The British owner of the Ogilvy, Grey and Hill+Knowlton agencies said net sales fell by 7.9% in March, reinforcing analyst expectations of a 25% drop in the second quarter.
That is obliging it to cut costs and respond to a downturn it expects to be more severe than the 2008 financial crash.
Chief Executive Mark Read said a freeze on new hires would force the multiple agencies to move staff around within the holding company, while client demands for advertising to address the pandemic have forced them to work faster than ever before.
“I think we’re working in faster, more agile ways,” he told Reuters. “Work that would have taken three months in the past is being done in a week.”
Read took over the top job in 2018, vowing to simplify the company built by his predecessor Martin Sorrell after clients complained it was too slow and unwieldy, prompting them to take some ad work in house and others to go directly to tech giants, including Facebook and Google.
Seeking to marry sectoral expertise with its technology know-how, he has merged agencies, such as the world’s oldest ad agency J Walter Thompson, with digital network Wunderman and merged its healthcare units with other agencies.
It is focusing on cutting more costs after it set out plans on March 31 to withdraw the dividend and share buyback to save around 2 billion pounds ($2.49 billion) in 2020.
While the 107,000-employee group will be hit by the loss of work from clients in the travel, autos and luxury sectors, more than 50% of its work is for customers in consumer packaged goods, technology and pharmaceuticals that are still spending.
Among additional cost-saving measures by WPP, more than 3,000 senior staff have taken voluntary salary cuts of up to 20%, some staff have gone to four-day weeks while an unspecified number of jobs have been cut.
The 2019 sale of its market research arm Kantar means net debt is at its lowest since 2007. Shares in the group, down 37% in the last three months, were up 6%.
Reporting by Kate Holton; editing by Guy Faulconbridge, Andrew Cawthorne and Barbara Lewis