Juan Pedro Moreno: “WPP is much more than all our brands put together”.
Juan Pedro Moreno has just landed at WPP, a communications giant with a multitude of leading agencies in their sectors. He comes to the multinational as executive chairman, a position that has been vacant in the Spanish subsidiary for several years.
He comes from Accenture, a consulting firm where he has worked for more than thirty years. In his last stage there he became CEO of the firm for Spain, Portugal and Israel. He has extensive experience in digital transformation and innovation, axes that he plans to apply in WPP so that the company knows how to adapt to the new needs of advertisers.
He welcomes DIRCOMFIDENCIAL on the sixth floor of La Matriz, the WPP Campus in Madrid, to explain his plans for the company and give his vision of a market he has just arrived in.
It has been years since WPP had an executive chairman in Spain, what will his role be?
My role is executive chairman. The two words have their meaning. President’, because I am not the CEO of the operations of the 17 operating companies we have, as each one has its own life. And ‘Executive’ is very important because it is not a position of institutional representation. It has an alignment component for the execution of a group strategy.
My main mission is to ensure that, as a group, we execute a common and integrated strategy in Spain, which is one of the top ten most important countries for WPP. We are one of the most strategic markets for the group and that requires a local strategy.
With the departure of Martin Sorrell, WPP ceased to be a financial group and became a leading strategy in the world of communications, advertising, marketing and technology. It is not the result of a grouping of activities, but the result of a strategy and positioning in the market. This is what I am here to do.
You come to WPP to transform the company in what way?
Transformation has to have two parts. It has to have an objective and ambition, which is not mine, but that of the WPP group and which is already defined: what we want is to implement the concept of creative transformation in which technology and processes are very important, but without a component of innovation, ideas and creativity, it does not produce business results. This is the WPP strategy in which we are positioned as leaders.
Then there is what I can bring to the table. There are three levers that I irrevocably apply wherever I go because they produce success. The first is that what you plan for is what happens. I’m a big fan of thinking that you have to have a plan and unite everybody around that plan. I’m good at doing that.
You also have to have an important component of innovation. Clients are increasingly asking you not to answer a question they have asked you, but to ask them the question and present them with your answer. This requires a lot of innovation, ideation, creativity and anticipating customer problems. This sector is very used to a pull market: customers know what they want, they ask you and you give them an answer. This is a transformational change that I really like to do and that produces a lot of results.
The third lever has to do with talent. This is a talent business. At WPP we sell brain cells. If your business is about talent, you depend a lot on the people who bring that talent, having a sense that they are in the best place.
On top of that, I come from a place where brand is everything. One of the first things I’ve seen is that WPP is worth a lot more than all our brands put together. But in the marketplace it’s not tangible. Of all the holding companies out there, WPP is the least tangible. We don’t have any agency called WPP, as Havas or Publicis does. There is a more fragile link between WPP and the power of its brands. There is a very big opportunity here to put value on a brand like WPP, which is listed on the stock exchange and is a world leader far ahead of any other group.
“There is a very big opportunity to showcase a brand like WPP, which is listed on the stock exchange and is a world leader far ahead of any other group”
Are consultancy firms a mirror for large advertising holding companies to look into?
All companies have to learn from others. One of the things that has changed the most about the digital revolution is that it has blurred the boundaries between industries. Everything that one sector does is relevant to another.
As an industry, we have two things to learn from consultancies. They are extremely proactive in sending out their messages, solutions and proposals. They live in a completely push market, whereas our sector lives more in a pull market. We can also learn from their end-to-end focus. Consultancies aim to produce a business impact, a real impact. They are able to combine whatever it takes to produce it. In our industry we have many pieces, but we rarely put the puzzle together.
In return, consultancies have to learn from our industry that you can’t be creative with method and procedure alone. Creativity and innovation is something that has to be cultivated. This requires time, attitude and a context where people feel that all this is promoted. That’s why I think that consultancies that enter this sector are shocked because they don’t see that creativity is an animal that hardly grazes on their land. It eats something other than what consultants eat.
Another very peculiar aspect that occurs in this industry, linked to the world of ideas, is that size doesn’t matter so much. Creativity lives in a person. If you have a great idea, when you have the levers – as we have – of technology, ecommerce, public relations and media, it doesn’t matter whether you are big or small.
“Consultancy firms have to learn from our industry that method and procedure alone cannot be creative”
WPP has 17 agencies, often in competition with each other. In that plan you mentioned earlier, do you intend to establish synergies between all of them?
Synergies, yes, but I don’t mean that the agencies should be merged. We do four things: creativity and media, ecommerce and technology and public relations. These four things are not the same. Maybe in media it makes sense to group them together as we have already done, but in creativity, which lives in a very specific culture, it probably makes less sense.
Here the synergies lie in managing to put the strength of all these capabilities that we have in the group at the service of creating a product that generates an impact on the income statement and on the efficiency of clients, and attraction, trust and NPS in consumers.
There, this group has unparalleled possibilities to create synergies when it comes to generating product, solutions, impact… These are the ones I am going to pursue.
As for the group’s internal synergies, the fact that we have all come to work at La Matriz is one of them. And there will be more like it. If there are brands that have no value in the market – for the moment, this is not our case – then they should be integrated or merged. The criterion will be whether they have value in themselves.
“If there are brands that have no value in the market – which is not the case at the moment – then they should be integrated or merged”
What surprised you when you arrived in this sector?
One thing that struck me is that when I arrived in the sector, I was struck by the fact that it is not very transparent. I’m not sure it is when you compare it with others. It is public how much advertisers invest, to which agencies the money goes… One strength that we have to take advantage of in our group in favour of transparency is that we are a listed multinational and subject to all the rules of transparency.
This idea of the sector is because it is very fragmented, there are small companies, the indies… That is why the more we leverage on saying that we are part of a listed multinational group, the more interesting reputational synergies will open up.
Fees
You are landing in a sector where fees are low in Spain and in some cases even non-existent.
This is not typical of the communications market. I come from technology, from services, and it’s exactly the same. The Spanish market has many advantages. It is a hidden gem. If you put together the productivity, the talent and the price of Spanish people – I’m not saying WPP, I’m talking in general – the Spanish market is unequalled in Europe. A productive hour in Germany is four times more expensive than here.
We have done something at WPP that is working incredibly well. We have created Hogarth, which specialises in media production. We’ve taken everything they were doing in production out of the agencies and put it into a new company. There is no one in Europe – in the internal world of WPP – that can compete with Hogarth with the prices, the quality and the productivity that it has.
Spain is used to buying in bulk. This is changing in the consumer sector but in the services sector it has yet to happen. Our industry is not a bulk industry, because precisely what you are buying is differentiation, uniqueness… In consultancy it is said that “if you pay rubbish, you buy rubbish”.
This is a challenge for this sector and others. In general, in Spain people don’t like to pay for quality. It has a lot to do with our culture. It is one of the things I would like to fight for.
You land in a sector where fees are low in Spain and in some cases even non-existent, does the model need to change?
This is not typical of the communications market. I come from technology, from services, and it’s exactly the same. The Spanish market has many advantages. It is a hidden gem. If you put together the productivity, the talent and the price of Spanish people – I’m not saying WPP, I’m talking in general – the Spanish market is unequalled in Europe. A productive hour in Germany is four times more expensive than here.
We have done something at WPP that is working incredibly well. We have created Hogarth, which specialises in media production. We’ve taken everything they were doing in production out of the agencies and put it into a new company. There is no one in Europe – in the internal world of WPP – that can compete with Hogarth with the prices, the quality and the productivity that it has.
Spain is used to buying in bulk. This is changing in the consumer sector but in the services sector it has yet to happen. Our industry is not a bulk industry, because precisely what you are buying is differentiation, uniqueness… In consultancy it is said that “if you pay rubbish, you buy rubbish”.
This is a challenge for this sector and others. In general, in Spain people don’t like to pay for quality. It has a lot to do with our culture. It is one of the things I would like to fight for.
“Spain is used to buying in bulk. This is changing in the consumer sector, but in the services sector it has yet to happen”
Does WPP want to lead the change in the advertising industry?
Being a market leader in the world, as WPP is, not only gives you opportunities, it also gives you responsibilities. One of the most important ones is to mark the lines of where the sector has to go. I am very clear about that responsibility. Perhaps because I also come from a company that is also a leader and in which I have been very involved in setting the line of where things have to go, with more or less success.
During your time at Accenture, you bet on creativity by acquiring Shackleton. What does creativity bring to business today?
Creativity is the key that moves the world. I give many lectures on digitalisation and in the end I have concluded that this process without creativity goes nowhere. Big Data or Artificial Intelligence – which are the paradigms of digitalisation – are an answer to a question. If there is no intelligent question, there is no intelligent answer. The secret is in the question, not in the answer, which is the technology. Creativity plays a very important role in all this.
WPP headquarters in Madrid.
There has been a significant slowdown in advertising spend in Spain in Q3. WPP has grown by 2.3% in Q3, compared to 16% in Q2. How do you expect to end the year?
In Spain we are going to have a good year. Having grown in the first half of the year at the rate we did and continuing to grow now, we should have a pretty good year.
But apart from the numbers, we have grown a lot in terms of relevance. Agencies like VMLY&R, Wunderman Thompson, The Cocktail, Sra Rushmore, Ogilvy, David… are growing a lot in this aspect. It’s been a year of filling up the gas tank. We are not going to have a bad winter because our tanks are full.
I say this in a context of uncertainty that affects everyone. There are contradictory data. As you said in your question, there is a slowdown in the second half of the year, but I also see that 70% of advertisers say that in 2023 they will maintain or increase their advertising investments.
I am optimistic and excited about the future for two reasons. One, internal: as I said, I see WPP’s tanks full. It’s the best I could have found. I didn’t do it. It was already there when I arrived.
On top of that, there are certain sectors that are counter-cyclical. We are entering a world that has characteristics where companies like ours are the answer. Consumers are becoming more selective. At a time of increased competition, are you going to shut up, or is it time to get in front of your consumer and attract them? Another reason is that consumer attitudes have changed a lot. Brand communication is increasingly in need of a different approach. There are starting to be other social elements of purchase that go beyond price and quality. Brands have to carry out a major communication exercise to communicate these things. And also the experience, where digital comes in. Experience is an important purchasing value. Here we have specialist brands such as VMLY&R, Wunderman Thompson, Ogilvy and/or The Cocktail.
There will be acquisitions in Spain
Are acquisitions being considered to accelerate growth?
This group, since it was created in 1985, has been an acquisition machine. Yes, we will make acquisitions around the world and also in Spain.
Spain is one of the priority markets for WPP and there are interesting opportunities. In several directions. On the one hand, we are in a market that has yet to consolidate: there are many independent media agencies, creative agencies?
There is also another area of acquisitions that is more linked to innovation. It is increasingly interesting to have innovative tools in your portfolio at the service of communication. For example, solutions that allow you to extract the maximum value from digital marketing, to build responses to clients using artificial intelligence and Big Data over data lakes…