Fri, 18 Dec 2020 | BUSINESS NEWS
WPP, the world’s biggest advertising group, has announced that it intends to pursue £200m-£400m in acquisitions each year in high-growth areas such as ecommerce and tech. In its strategy, announced to investors on Thursday, the company said this would help it expand its ecommerce and marketing technology business from 25 per cent of revenues to 40 per cent by 2025.
Having been impacted by the COVID-19 pandemic, WPP expects to recover to single-digit revenue growth by 2022 before exceeding market estimates and achieving 3-4 per cent revenue growth a year from 2023.
The company plans to make around £600 million in cost savings by 2025 by streamlining its business and property portfolio. It then intends to reinvest around £400 million of this, including through hiring.
For the past two years, WPP has been simplifying its network of advertising and marketing companies developed under founder Sir Martin Sorrell, who left the company in 2018. In this time it has struggled to record positive revenue.
WPP CEO Mark Read commented: “Now is the time to benefit from the integration of the company and look for new growth opportunities that go beyond the traditional communications market of WPP.” However, Read cautioned that the company would not be embarking on “an acquisition spree”, but that “The number one thing we have to do is deliver organic growth.”
Regarding the structural changes already made at the group, Read said: “The actions that we have taken have positioned us well, and we are already working with 76 of our top 100 clients on ecommerce. There are significant new growth opportunities for WPP as clients demand simple, integrated solutions that combine creativity with technology and data expertise.”
“In partnership with our agency brands we are deepening and accelerating the change already happening within WPP. We aim to return our communications business to sustainable growth and invest further in the high-growth areas of commerce, experience and technology. We are converting our size into scale, making us more effective and efficient as we share expertise across a simpler company of stronger agency brands.”
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