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Deep Dive 31 May 2022 - 7 min read

WPP global CMO Laurent Ezekiel, ANZ lead Rose Herceg on bringing rival networks into $4bn ‘open source’ Coke account, peak complexity, consolidation end game – and proving Sorrell wrong

By Paul McIntyre & Brendan Coyne
WPP's Rose herceg and Laurent Ezekiel

Herceg and Ezekiel: Consolidation a major trend globally and regionally, but WPP's transformation is done.

Brands and agency holdcos are restructuring for efficiency. But WPP says it’s done with post-Sorrell surgery and out the other side, proving the former CEO wrong in the process. Its “open source” integrated set-up landed the $4bn global Coca-Cola account and means other agency groups can feed-in. It could prove a template for consolidation plays to come, per global Chief Growth and Marketing Officer Laurent Ezekiel. WPP ANZ’s Rose Herceg is equally bullish on the holdco’s growth prospects after leadership overhaul and smashing an unwieldy list of business units into nine networks; she says both staff and clients are “loving” a story simple enough to articulate. Ezekiel meanwhile reckons the marketing industry is past “peak complexity”… until the “untapped” metaverse arrives. But he’s unapologetic for the daunting privacy challenges industry faces, and shrugs off concerns around Big Tech’s dominance, given the growth he suggests the platforms are driving.

What you need to know:

  • WPP says its restructure is complete. No more consolidation of agency brands is on the cards, say global CMO Laurent Ezekiel and AUNZ President Rose Herceg.
  • New bespoke global structure built for $4bn Coke account, OpenX, opens door for non-WPP brands, including rival groups, to collaborate.
  • Ezekiel reckons industry is past “peak complexity” as brands globally and regionally aim to consolidate. Claims WPP now qualified to consult on transformation beyond marketing. No plans to ‘do an Accenture Song’ and go whole hog on agency brand integration.
  • Herceg says brands and staff “loving” simplified, open approach, dismisses suggestions her ‘Joy’ mantra is fluff, says no duplication of tech within decentralised agency structures.
  • Ezekiel disagrees media/marketing industry went too far on data tracking and targeting, says Big Tech are “amazing partners”, but media still main growth engine.
  • WPP quickly out of Russia, got non-staff out of Kharkiv.

Can brands simplify to be faster, more effective, more efficient … which bits they centralise, which bits they do not? That is a big discussion.

Laurent Ezekiel, Global CMO, WPP

Horizontality hangover cured?

A year ago to the day Sir Martin Sorrell admitted to Mi3 that he couldn’t reengineer WPP fast enough when at the helm. Now global CMO Laurent Ezekiel says WPP's restructure is done, and takes some satisfaction in proving vocal naysayers wrong.

“The narrative was that the end of the world is coming. And surprise, surprise, it didn’t," he quips.

Transformation complete, Ezekiel claims the holdco is in a good position to “advise on the big decisions around structure” that top CMO agendas globally and regionally. “Can they simplify to be faster, more effective, more efficient … which bits they centralise, which bits they do not? That is a big discussion.”

Coles – the largest of the local consolidated media, creative, production, CX pitches, but ironically no longer involving WPP due to conflicts with Woolworths Group – is grappling with the same question.

It could be that the model established for Coca-Cola – a $4bn piece of business spanning 200 countries and brands – provides a template. But big wins never come easy.

“It was a long one,” Ezekiel deadpans of the year-long "biggest pitch in our history" conducted virtually amid Covid lockdowns. “It started off as a creative pitch and a media pitch, running a little separately. Then as we went through the year in 2021, they sort of merged together in summer and became a full scale marketing pitch.”

It’s an open system. Okay, we’re doing most of the [Coca-Cola] work, but it’s an open system. We know that we have to partner to grow together.

Laurent Ezekiel, Global CMO, WPP

Coke was on a similar consolidation tangent to WPP, at an even bigger scale.  

“The sense of ambition from the Coca-Cola Company was extremely high. To deliver on that ambition [WPP decided] a simple, full service, fully integrated solution was probably the way to go. [Coke] went through a huge transformation called ‘Emerging Stronger’ the year before. They saw from us a vision of full integration at scale… That’s what they wanted to do and what we’re doing with them as we move forward,” says Ezekiel.

“It's 200-plus countries, it's about 200 brands, a portfolio that used to be 400 brands, so they've rationalised it and it's every single marketing service – creative, social, technology, media, brand, PR, production, adaptation. It really is scale like never before – and it needs to be.”

The model, dubbed OpenX, is perhaps the antithesis of the horizontality pioneered by the former regime. As well as opening up access “to the whole of WPP”, for Coca-Cola, it’s also “open-source”, meaning other non-WPP agencies and networks can tap the platform built for Coke, with global CMO Manolo Arroyo stating the firm will continue to work with both Publicis and IPG under the set-up.

“It’s an open system. Okay, we’re doing most of the work, but it’s an open system,” says Ezekiel. “We know that we have to partner to grow together.”

Early work, 20 per cent savings?

Six months on from landing the whopper account, early WPP-Coke work is coming to market. Ezekiel cites ‘Heat Happens’ for Sprite, Coca-Cola’s second largest brand with $20bn in sales, as proof that the advertising giant genuinely aims to “recapture being the best marketing company in the world”, not just talk about it.

It’s Sprite’s first ever global brand platform, but tailored by region. “It’s bold, innovative and uses a lot of the services [wrapped into the pitch]. I think it’s proof that the model is starting to work. We’ve done all the work on that, it’s bold and it has gone to market very quickly.”

Ezekiel wouldn’t confirm cost savings as a result of speed and efficiency under Coke's new model, likely wary of setting a benchmark for other clients and future projects. Rumoured to be 10-20 per cent, “It’s a ball park that swings,” was all he’d say.

Joy is incredibly important because if you don’t love what you do, you will never be exceptional at it. What I say to our people is, if you love the work, then the money comes – and that’s kind of it.

Rose Herceg, President, WPP AUNZ

Not ‘doing a Song’, duplication dismissed

Ezekiel says WPP’s integration of creative agency networks is paying dividend, with Wunderman and JWT into Wunderman Thompson, AKQA and Grey into AKQA Group and the consolidated Ogilvy Group. “They’ve all got data and technology at their core now, and that’s as a result of WPP integrating their networks.”

He says agency consolidation is done and shakes his head vigorously when asked if WPP harbours any desire to ‘do an Accenture Song’ in killing off its agency brands entirely.

“I think we’re in a good place, and the proof is in the work and the numbers – and those brands are growing.” The focus is now on “refining how we work together” under an integrated umbrella. “It can always be better,” he says, “no question.”

Herceg says the same applies locally, and disagrees with the suggestion that operating a small, centralised WPP tech team under CTO Tim Matheson in tandem with networks housing their own tech capability results in duplication.

“Every one of our brands has a technology team, because they need [expertise within] CX, VX and UX. We need people who understand tech and the platforms and the relationships with Salesforce, Adobe, AWS and Google. So it's not enough just to have that in the centre,” says Herceg.

“I wouldn’t say duplication, I would say area of expertise. Wunderman Thompson might be sensational and consultative with data, CRM, and one-to-one selling. Ogilvy might be terrific at building you an ecosystem. AKQA do the best re-platforming in the world, they'll take a [large retailer] and put them online. So it's tech. But, like Baskin Robbins, there are 31 flavours. They each have their area of specialty, so there is very little duplication.”

Herceg states unequivocally that there will be no more merging of brands locally.

“No, we’re done. Nine networks, that’s who we are now. We know who we are, what we stand for," she says. "Now we just go forth and do our job.”

Amen.

I talk about peak complexity. I think we probably got to that and I think we are beyond it.

Laurent Ezekiel, Global CMO, WPP

Peak complexity, privacy crunch, big tech ‘amazing partners’, but media still king

Purpose, commerce, CX and the metaverse are all at the top of brand owner agendas globally and regionally, says Ezekiel, with the latter “a big trend” and an “untapped” opportunity rather than the next trough of disillusionment. 

“We’re speaking to every single one of our clients about the metaverse and we’re working with many of them on it. People are using it and going there.”

How the metaverse plays out remains to be seen. But first brands, publishers and the media supply chain needs to get to grips with ongoing privacy changes as regulators around the world belatedly attempt to regain control of what is commoditised in the name of targeted advertising.

Privacy is another major agenda item for client brands, says Ezekiel, and “we are advising them as best we can”. But he disagrees that industry faces its current problems due to a questionable ethics gradient: “I don’t think we went too far, no.”

Neither is Ezekiel unduly concerned about Big Tech’s dominance. “They are amazing partners for us.” Doesn’t he have to say that? “But they are – and a lot of what we’re building, where we are innovating in particular, is in those areas," he insists. "So, no.”

That said, for all the growth coming from Big Tech, and the concerted push by holdcos to become tech companies themselves, media is still WPP’s main breadwinner.

“Media remains the dominant force in terms of how we do business. If I look at our top pitches, they often are large media pitches. The platforms that you reference, they enable growth for us because we have amazing partnerships with them, whether it's Microsoft or Salesforce or Google or Adobe, the list goes on and on. The closer the relationships we have with them, the more we can do with our common clients,” he says.

“I wouldn't say that it's biting into another part of our growth across the company. Media is growing and work with the platforms is growing. So we just see it as growth.”

Meanwhile, Ezekiel thinks the marketing world is beginning to surface after drowning in data thrown up by the platform age.

“I talk about peak complexity. I think we probably got to that and I think we are beyond it,” he says, suggesting data-driven marketing and complexity are intrinsically linked.

“Data is an enormous topic of conversation, but it's been a big topic for a little while now. People have had time to make decisions, put plans in place, get plans in motion. And I think that's starting to settle down in our client organisations. So my view is we're just beyond peak complexity.”

Time will tell.

Footnote: Russia

Russia's invasion of Ukraine led WPP to quickly pull out. It was among the vanguard of around 1,000 brands that have since curtailed operations, though there are some notable partial holdouts. WPP is fully out and the indication from WPP is that it won't be going back. "It's shut down," underlined Ezekiel.

He says CEO Mark Read's moves at speed to close the business in a volatile environment proved instructive. "It was amazing watching him and the team during that period, which was very difficult. There is no playbook for it.”

While agencies around the world have deep concerns for staff in both Russia and Ukraine, with many offshoring coding to both countries, Rose Herceg says the firm also managed to help non-staff get out of trouble.

"Chris Solomon runs Mindshare Melbourne. He had family in Kharkiv. They don't work for WPP ... He rang me on a Friday night and said, 'Rose, I'm terrified. What do I do, can I even ask?' It went straight to Mark Read and the team ... WPP were the ones that got them out safely to Poland."

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