Former WPP digital boss Mark Read has been tasked with repositioning the global advertising behemoth to better meet the needs of clients in an increasingly digital world. Picture: REUTERS
Former WPP digital boss Mark Read has been tasked with repositioning the global advertising behemoth to better meet the needs of clients in an increasingly digital world. Picture: REUTERS

London - WPP’s reputation has been bruised after Ford Motor, one of its biggest and oldest clients, transferred advertising business worth hundreds of millions of dollars to rival Omnicom Group.

The decision ends a 75-year partnership between Ford and creative house J Walter Thompson, acquired by London-based WPP in 1987, which has made adverts for the carmaker since the end of World War 2.

The loss is a setback for new WPP CEO Mark Read, who succeeded the company’s founder, Martin Sorrell, in September.

Ford’s move sends a warning signal to WPP managers as they gather for their annual strategy get-together this week.

Read is looking to revive WPP, whose shares have declined 18% this year as Madison Avenue faces declining advertising spending from top clients and fresh competition from consultants such as Accenture and Deloitte.

WPP has a dedicated agency, Global Team Blue, located opposite Ford’s Michigan headquarters that handles the account.

WPP agencies will continue to handle media planning, buying, digital marketing and production, the advertising company said in a statement.

The US carmaker chose Omnicom’s BBDO as its lead creative agency after "a rigorous five-month process", it said in a separate statement on Monday.

The lead creative agency comes up with ideas for advertising campaigns and designs and creates the adverts.

Ford’s creative work made up 1%-1.5% of WPP’s sales, Kepler Cheuvreux analyst Conor O’Shea wrote in a note last month. The overall Ford account, including elements such as media, comprises 5% of WPP’s revenue, O’Shea said.

WPP reported $19.7bn in sales last year.

The loss "is tempered by retention of some business, including media and production", Bloomberg Intelligence analyst Matthew Bloxham said in a note. "Still, it creates a hole in the pipeline that will hinder momentum under new CEO Mark Read, and inevitably will lead to some more soul-searching about future strategy."

A WPP spokesperson declined to comment on exactly how much WPP would lose in revenue from the Ford move.

Ford’s new approach – including hiring 100 new in-house global marketing workers – is expected to save $150m annually, the company said.

WPP announced Ford was reviewing their relationship in November 2017 and the formal review kicked off shortly after Sorrell quit in April. Sorrell left the company he built from scratch after facing allegations of misconduct, which he denied.

WPP and its global peers Omnicom and Publicis Groupe are struggling as major clients such as consumer goods giant Procter & Gamble spend less on marketing and as internet giants Facebook and Alphabet’s Google threaten to cut out the agency middlemen.

Bloomberg

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