What a fall for WPP as it turns to McKinsey for strategic guidance

The ad giant's slump, shareholder anger, and talk of a Havas-led bid have pushed WPP into a high-stakes reset that could reshape the global advertising industry

Haye O Rabba! What is happening at WPP?!

 

The world’s largest advertising network has just hired the world’s most famous (and expensive) consulting firm, McKinsey, to help “reset” its strategy. And almost on cue, there are media reports that say that Havas Chief Executive Officer (CEO) Yannick Bolloré has been in touch with WPP, discussing an “investment” or “consolidation”, perhaps even a buyout. Phew!

 

Let us start with the McKinsey hiring first. It is a clear signal that trouble at WPP is real. And consequently, the solutions being sought are not necessarily gentle. It is no longer about killing iconic agencies (JWT, Young & Rubicam, and Wunderman), merging entities (Grey into Ogilvy), or rechristening businesses (Group M to WPP Media) or just trimming headcount by 7,000-odd employees — the conflagration is mighty more serious and needs fire engines to be summoned — and that too without delay. So, McKinsey is here. And now.

 

WPP’s shares have fallen more than 60 per cent since the beginning of 2025, and continue to trade near 27-year lows. The business’s market capitalisation has fallen by more than 80 per cent over the past eight years — it was valued at 25 billion pounds in 2017; today the value is closer to 3.3 billion pounds. After two profit warnings in three months and a full-year revenue decline expected to be possibly as steep as 6 per cent, the patience of shareholders has obviously thinned out pretty much. Incoming CEO Cindy Rose’s blunt verdict of “unacceptable performance” kind of sums up the seriousness of the problem at WPP.

 

What was once a daunting and dominant creative empire, with mammoth and magical media clout today resembles a jumbled-up tech-and-data wannabe with unwieldy and messy realities of scale, tottering, old, and shaky legacy structures, and ever moving client expectations. All further complicated by declining revenues and a new elephant in the room called artificial intelligence (AI). What is McKinsey’s mandate? For those who are aware of McKinsey would know they aren’t coming in to discuss the next “big idea” that will excite creatives and pave the way for more Cannes accolades. Or discuss “reshaping” the organisation by playing musical chairs. They’re at WPP to “stress-test choices” and, more importantly, to force decisions that lead to rising revenues and sustainable profits. That’s it.

 

Now to Yannick Bolloré and his plans. WPP shares rose sharply amid market speculation that the advertising group could be the subject of a takeover by a rival or a private-equity buyer. Havas, which was listed on Euronext in Amsterdam last December and is controlled by the billionaire Vincent Bolloré, reportedly held internal talks about a potential bid on WPP. Media reports vary on whether actual contact was made with WPP top echelons or not, but the news itself helped WPP stock gain 11 per cent in just a single day. There have also been other “inspired” reports which suggested that private-equity groups — Apollo and KKR — have been looking seriously at some WPP assets.

 

For the record, KKR did last year acquire WPP’s PR company FGS Global. So an interest in the larger WPP company cannot be completely ruled out. And Havas, the smallest of the global advertising holding companies, had previously tried to build scale, particularly in relation to its media buying and selling capability by investing in UK (United Kingdom) media-buying entity Aegis. Vincent Bolloré exited with a substantial upside when Dentsu gulped down Aegis in 2012. Yannick Bolloré could well have been planning something similar with WPP — in whole, or in part, this time again. Earlier this year Accenture, the US consultancy group that has built up a large advertising business, also reportedly held talks with WPP over a potential deal or partnership. As they say, there is never smoke without fire — though for now Havas at least has negated press reports, and denied any dialogue with WPP. But who knows? 

The WPP appointment of McKinsey is not about tightening alone. Sure there will be much bloodshed and a large number of job losses in the days to come. But the mandate really is to get WPP to shape up, speed up, simplify, streamline, and smarten up. The game will change from maximal (more clients, more agencies, more offices, more people, more revenue) to optimal (more profits, more return on investment). And the culture at WPP’s agencies will have to go through a cataclysmic change — from creatives and campaigns to clicks and conversions in an increasingly machine-to-machine world driven by AI.

 

What a fall for WPP! From a celebrated advisor to Coca-Cola, Ford, Google, Microsoft, Nestlé, Unilever, IBM, Apple, Amazon, and Pepsi to one seeking wiser counsel from McKinsey! This must have taken WPP swallowing a lot of pride, and eating the humble pie.

The author is chairman of Rediffusion