WPP discussed cost-saving measures in its recent Q1 earnings report, and has begun putting those plans into action with cutbacks affecting GroupM as the media-buying giant began laying off staffers earlier this week.
In a statement to Adweek, a GroupM spokesperson confirmed a reduction in headcount had taken place, with the layoffs understood to affect various parts of its operations across several markets.
“We are working hard to limit the economic impact of the Covid-19 pandemic on our people while protecting the health of our business as a whole,” said a GroupM spokesperson. “This has included senior salary sacrifices and other cost-saving measures. Unfortunately, despite these efforts, in some markets we will have to make staff reductions and part ways with talented employees. We are doing everything we can to support those colleagues who are affected during this very challenging time.”
The extent of the staff cuts is unclear. However, Nicolas Bidon, CEO of GroupM’s programmatic arm Xaxis, said his unit was hit with layoffs in the “low single-digit percentage” this week while speaking on Adweek Together.
“We tried to do this in a way that mimics some of the reality we’re facing. There’s not going to be a lot of event marketing, for instance, going on this year,” Bidon said in conversation with Adweek programmatic editor Ronan Shields. “And also, more importantly, [we’re] trying to not cut in places where we think it will be extremely important to be fully staffed to be able to deliver the kind of service and results our clients expect when the recovery takes place.”
Last week, the company reported that revenue dipped 4.9% in the first quarter, with executives discussing cost-saving measures including making “some permanent headcount reductions.”
“In a similar approach to WPP, we first looked at how can we minimize the impact on our talent, because we all realize, and especially at Xaxis, that there is a war for talent and that the data scientists—the traders that are the future, I think, of the media space—in general are quite hard to recruit and keep,” said Bidon, adding that Xaxis has suspended discretionary spend in areas such as travel, entertainment and marketing.
GroupM is taking cost-saving measures as clients pull back on ad spend during the coronavirus pandemic. That sudden absence of dollars has forced both the buy and sell sides to evaluate their inventory partners, renewing supply path optimization (SPO) efforts.
“We’re trying to reduce the complexity by establishing more direct relationships with the quality media owners and agreeing with them on the preferred route in the programmatic stack to their inventory. By doing that, we ensure that we get the best price for our clients, and we also ensure we have the best brand safety and certainty of minimizing fraud,” Bidon said.
This push toward SPO comes as a report from ISBA, the U.K. trade body for brand-side marketers, found that only 51% of programmatic ad spend reaches publishers, with 15% of spend lost in the supply chain.
Xaxis has recently pivoted to what it describes as an outcomes-based offering that gives advertisers a more transparent breakdown of its fee structure.
“At the end of the day, if you as an advertiser can measure adequately the value you get from every dollar you spend on advertising programmatically, the question of where is the money going in the value chain becomes less of a worry because you do get the results,” Bidon said.