…WPP has failed to fend off Publicis to retain the North America media brief as the pitch comes to a conclusion.
The timing of Coca-Cola’s US media review couldn’t have been worse for WPP. Two weeks ago, the holding company posted a worse-than-expected revenue decline which caused its share price to hit a four-year low.
It was hoping that its vision for integrating AI and putting a revived GroupM front and center of a turnaround plan would set it on a new course. So, news that one of its biggest clients, Coca-Cola, has moved a significant portion of its business to rival Publicis (a stock market darling in comparison), has rattled even the staunchest investors.
WPP has been Coca-Cola’s global network partner for four years. It won the year-long pitch against Publicis in November 2021, giving the agency responsibility for the marketing of over 200 brands in five categories across 195 countries in nine territories. In total, the business is worth $4bn to WPP.
Coke said at the time that the depth and breadth of the WPP scope was greater than any other marketing partnership in the brand’s history and WPP was expected to serve as “a catalyst in the transformation of marketing effectiveness and efficiency.”
WPP quickly set up a bespoke team, Open X, to manage it. This was run by chief executive Laurent Ezekiel, chief communications and marketing officer, Julianna Richter, global chief strategy officer, Chris Binns, and chief creative officer, Andrew Keller.
Speaking to The Drum two years into the mandate, they said the brief was simple: Coke wanted to move its marketing from a majority analog output to 60% digital and to push the business into more live experience-based media. It also wanted to “create consistency across its markets.” The first year saw Coca-Cola transfer all of its media, creative, social and production into WPP, while the second year added commerce, data and technology, influencer marketing and live experience.
That Publicis has now taken such a huge slice of this account – estimated to be worth $700m – so early into this relationship has blown up a model specifically designed to break down silos and deliver consistency and integration.
“It’s major. This is one of the iconic accounts, right? So, it’s a major blow to GroupM and WPP at large if it ends up going to Publicis,” said one source in the media industry who spoke on the condition of anonymity before the outcome was known.
Neither Publicis nor WPP has commented on the review.
A source close to the process told The Drum that GroupM’s CEO Brian Lesser was heavily involved, his first major pitch since taking the role last July. WPP chief Mark Read has made no secret of the media agency’s importance to the group saying it is the key to unlocking value for clients as it invests $300m into artificial intelligence. That Lesser and Read have failed to convince Coke on the vision will be a sore blow.
The media exec The Drum spoke to said clients across WPP are still unsure of what the future holds under this new GroupM-led proposition. “There is, even with some of the biggest clients of GroupM, a bit of uncertainty and unclarity around this all means for them.”
But, he did caveat it might have been “too early for that to materialize into better momentum on this kind of competitive pitch. These things are always cyclical, but it’s very clear that WPP is on a bit of a downtrend, and Publicis is very aggressive in the market at the moment.”
Jay Pattisall, VP and principal analyst at Forrester, had earlier told The Drum that losing the business would “contribute to WPP’s performance woes.”
That appears now to be materializing, with WPP’s share price down this afternoon on the news.
But while a loss of this magnitude, at this critical time, is a blow to WPP, it wouldn’t be irrevocable, in the eyes of shareholders. Pattisall stressed: “Agency holding companies are not ‘meme stocks’ that turn on headlines and sentiment. They are sophisticated portfolios of software, services, currency exchange rates, real estate and new business development.”
As WPP tries to recalibrate after the loss, eyes will be on Read as he doubles down on his turnaround plan.
Source: thedrum.com