WPP’s fragmented Australian empire remains a problem for ultimate boss Mark Read

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Running a still-rambling organisation like WPP must be rather like herding cats – and there’s a large and recalcitrant moggy in Australia called WPP AUNZ.

This is the result of a merger between home-grown STW and WPP in 2016, creating the biggest ad force in Australia and New Zealand. The two had previously shared ownership of some WPP brands.

Former WPP CEO Sir Martin Sorrell, the architect of the merger, made various attempts to bring AUNZ to heel, partly by centralising. Prior to the full merger he tried to make all his agencies use the same production facility – unsurprisingly they demurred in that vigorous Aussie way.

Now his successor Mark Read finds himself with a company in which WPP owns the majority but where there are other significant shareholders. WPP AUNZ is publicly listed as a separate entity so anything WPP management tries to do has to happen in the full glare of publicity.

WPP AUNZ has just declared full year 2019 losses $227m, which it blames on impairment charges (you have to look fairly hard for these in the accounts.) The man charged with turning it round is CEO Jens Monsees, who joined from BMW where he was the “digital transformation” supremo.

As ever with such exercises, collaboration, centralisation and one P&L account make up the management mantra. Monsees told Mumbrella: “If you think about a market like Perth or Adelaide or Auckland or Wellington, they are quite remote. They are serving an addressable market in that region or in that city. In the past, we had not much collaboration between the brands sitting in Perth, in Adelaide, or in Auckland. Now, the new model is that we have one leadership team per campus that is across the brands.

“So, for example, for Perth, we have identified one strong leader and one P&L for all the brands that are sitting in Perth and serving our clients in Perth. It is, from my point of view, a much better model.

“And the second thing is that even in cities like Auckland, we had more than seven different facilities and buildings. And now, we bring all our people together in one building and then they can collaborate much better and exchanging much better [which is] what our clients really need.”

But is it what the troops want? Or clients need?

Agency staff are loyal to their brands (which remain) but don’t particularly enjoy being part of a lump called, un-winningly, WPP AUNZ. Clients applaud their agencies for collaboration and all the rest of it but what they’re really concerned with are outcomes (and their cost.)

The danger with companies like WPP – anywhere in the world – is that most of the effort goes into managing the business (or trying to) rather than creating good work and client results. Australia has some excellent holding company-owned agencies – Omnicom’s DDB for example – but you don’t see much to rival that from the WPP empire. Will putting them all on a campus (aside from Melbourne and Sydney which are staying the same – those troops again) really help?

Of all the issues in Mark Read’s in-tray, WPP AUNZ looks perhaps the thorniest. WPP AUNZ is valued at just $515m these days; perhaps the best thing for Read to do would be to buy the 39 per cent or so WPP doesn’t own. But other shareholders would demand a stiff premium.

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