Wpp Plc · LSE:WPP
Wpp — Shareholder Meeting (June 2007)
62 slides from Wpp's shareholder meeting presentation, June 2007
Slide 1: AGM 2007
Slide 2: Philip Lader, Chairman
Philip Lader Chairman
Slide 3: Slide 3
Slide 4: Sir Martin Sorrell, CEO, WPP
Sir Martin Sorrell CEO, WPP
Slide 5: Strategic Priorities
Strategic Priorities Short term: to capitalise on the 2004 to 2006 up-turn Medium term: to continue to successfully integrate acquired companies Long term: to continue to develop our businesses in the faster-growing geographic areas of Asia Pacific, Latin America, Africa and the Middle East and Cent
Slide 6: Key Priorities, Objectives and Strategy
Key Priorities, Objectives and Strategy Faster growing markets to be one third of total group Marketing services to be two thirds of total group Quantitative disciplines to be one half of total group
Slide 7: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position Faster Growing Markets To Be One Third of Total Group WPP WPP Today WPP Today1 incl. associates1 Tomorrow Faster Faster Faster Growing Growing Growing North Markets2 North Markets2 North Markets2 America America America 24% 29% 33% 34% 39% 34% 37% 37% 33%
Slide 8: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position Brazil, Russia, India and Greater China (BRICs) account for approximately 10% of WPP revenue today According to Goldman Sachs research, Dreaming with BRICs*, these countries will grow at 10.4% CAGR through 2015 According to Zenith, ad spending as a % of G
Slide 9: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position Faster Growing Today Faster Growing 2015 Markets2 Markets2 North North America America 15% 12% Europe* 14% 39% 37% Europe1 24% 25% 8% 14% BRIC 12% BRIC UK UK 1 Europe excludes Central and Eastern Europe ² Asia Pacific, Latin America, Africa & Middle East,
Slide 10: Strategic Priorities: Marketing Services To Be Two Thirds
Strategic Priorities Marketing Services To Be Two Thirds of Total Group Today1 Today including Tomorrow associates1 33% 52% 48% 52% 48% 67% Marketing Services Advertising & Media Investment Management ¹ Based on full year 2006 revenue
Slide 11: Strategic Priorities: Quantitative Disciplines
Strategic Priorities Quantitative Disciplines To Be One Half of Total Group Today1 Today including Tomorrow associates1 33% 34% 50% 50% 67% 66% Information, Insight & Consultancy and Direct, Internet & Interactive Advertising, Media Investment Management & Other Marketing Services ¹ Based on full ye
Slide 12: Strategic Objectives
Strategic Objectives We continue to focus on our key objectives Improving operating margins Increasing flexibility in cost base Using free cash flow to enhance share owner value, and improve return on capital employed Developing role of parent company Emphasising revenue growth more as margins impro
Slide 13: Historic Headline PBIT and Margins
Historic Headline PBIT¹ and Margins PBIT1 £’m PBIT1 margin % Long-term target 19% 20% 1000 800 14.5% 14.0% 14.1% 14.0% 859 16% 13.0% Objectives: 12.0% 14.5% 600 13.0% 755 12% 2009 16.0% 561 534 560 468 8% 2008 15.5% 400 433 2007 15.0% 200 4% 0 0% 2000 2001 2002 2003 2004 2005 2006 PBIT Margin - Full
Slide 14: Financial Model
Financial Model Organic revenue growth 0-5% Margin growth in line with objectives Operating profit growth of 5-10% Incremental revenue and profit growth from acquisitions of up to 5% Overall growth in EPS of 10-15%
Slide 15: Earnings and EPS
Earnings and EPS¹ Earnings (£m) 42.0p 17% 500 36.0p 32.3p 29% 400 30.9p 29.0p 27.9p 300 23.8p 200 100 0 2001 2002 2003 2004 2005 2006 2004 UK GAAP IFRS ¹ Diluted Headline Earnings and Diluted Headline EPS
Slide 16: Increasing Flexibility in the Cost Base
Increasing Flexibility in the Cost Base We continue to focus on a more flexible cost structure in three key areas: – Staff c. 50% of revenue – Property c. 7% of revenue – Bought in services c. 30% of revenue Increased flexibility in all areas important to combat any future economic slowdown
Slide 17: Increasing Flexibility in the Cost Base
Increasing Flexibility in the Cost Base Change In Variable Costs 14 2001 2005 2006 12 10 8 % 6 8.2 12.8 13.0 4 4.6 7.6 7.7 2 0 Variable Staff costs as % of Staff costs Variable Staff costs as % of Revenue
Slide 18: Using Free Cash Flow - Acquisitions
Using Free Cash Flow to Enhance Share Owner Value - Acquisitions Tender offer for 24/7 Real Media Continued focus on small and mid-size strategic acquisitions – a number completed during first five months Major focus continues to be on information, insight & consultancy and faster growing sectors wi
Slide 19: Using Free Cash Flow - Dividends and Share Purchases
Using Free Cash Flow to Enhance Share Owner Value - Dividends and Share Purchases Share Repurchases 2006 dividend % of Dividends Annual raised by 20% to Dividends Amount Share Base per share increase 11.21p per share 2000 £21.1m £94.1m 1.3% 3.75p 20% 2001 £25.6m £103.3m 1.4% 4.50p 20% Distributions
Slide 20: Emphasise Revenue Growth More as Margins Improve
Emphasise Revenue Growth More as Margins Improve Continue to focus on delivering above-average revenue growth by: – Expanding networks to take advantage of faster growing geographical markets – Re-enforcing competitive advantage in segments where growth is expected to remain higher, eg, Market Resea
Slide 21: Improving the creative capability and reputation of all our businesses
Improving the creative capability and reputation of all our businesses By placing greater emphasis on recruitment By recognizing creative success tangibly and intangibly By acquiring highly regarded creative businesses By placing greater emphasis on awards
Slide 22: WPP Today
WPP Today Revenue £5.9bn PBIT £859m Branding & Public Media Information, Identity, Relations Advertising Investment Insight & Healthcare and & Management Consultancy Specialist Public Affairs Communications Revenue Revenue £2.8bn Revenue £893m Revenue £596m Revenue £1.6bn Wide £2.3bn PBIT £443m PBIT
Slide 23: WPP Opportunities
WPP Opportunities Geographic Technological
Slide 24: WPP Today
WPP Today Media Investment Irwin Gotlieb Management: CEO GroupM KR Media MindShare Mediaedge:cia MediaCom MAXUS (25%) Dominic Proctor Charles Courtier Alex Schmidt-Vogel Nick Daly Bruno Kemoun CEO CEO CEO COO Eryck Rebbouh Joint CEOs Kinetic
Slide 25: Irwin Gotlieb
Irwin Gotlieb CEO, GroupM 2003 appointed Global CEO, GroupM, world's leading full service media investment management company Launched MindShare North America, consolidating media resources of JWT/Ogilvy, to create global entity Joined WPP 1999 as Chairman/CEO MindShare Worldwide Prior to WPP, found
Slide 26: Rob Norman
Rob Norman CEO GroupM Interaction Worldwide Member of GroupM Global Executive Committee Prior to GroupM, founded and led digital media arm of Tempus Group (acquired by WPP in 2001) Responsible for digital practices of MAXUS, MediaCom, Mediaedge:cia, MindShare Largest buyer of online media in world G
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Slide 28: Irwin Gotlieb, CEO, GroupM
Irwin Gotlieb CEO, GroupM
Slide 29: The Leading Global Media Investment Management Operation
The Leading Global Media Investment Management Operation GroupM is the parent company to WPP media agencies – MAXUS, MediaCom, Mediaedge:cia, MindShare Represents over 31% of the worldwide media market (RECMA) The intelligent application of physical and intellectual scale to benefit our clients and
Slide 30: GroupM Market Strength
GroupM Market Strength Rank 1 Rank 1 $60.5bn Rank 1 $26.0 bn 31% $27.0 bn 32.2% 29.1% Rank 1 $6.3 bn 22.9% Rank 1 $1.2bn 25.2% Source: RECMA
Slide 31: Vitality
Vitality GroupM ranked number 1 in Vitality and Momentum by RECMA for 2006 GroupM agencies won 3 out of 4 “Agency of the Year” awards in the US – Mediaedge:cia - Global Agency of the Year - Ad Age – Mediaedge:cia - Global Agency of the Year - Adweek – MindShare - Agency of the Year - Adweek
Slide 32: Role of GroupM
Role of GroupM Maximize the performance of our media communications agencies – Ensure that each of our agencies is smarter and stronger in the service of its clients Operate as parent and collaborator in performance enhancing areas – Develop synergies and leadership among the agencies in trading, co
Slide 33: The Evolution of Media
The Evolution of Media Communications Planning Exploiting opportunities in Digital
Slide 34: What is Communication Planning?
What is Communication Planning? The effective allocation of marketing investments across all channels to meet a client’s business objective Uses a combination of rigour and imagination to deliver a holistic platform and architecture for a brand or corporate marketing spend – It defines how a brand w
Slide 35: A New IP and Data Centric Context
A New IP and Data Centric Context Communications strategists will be the key advisors for clients within the GroupM agencies They will marshall and package the full range of GroupM services – Business Science, Entertainment, Sports, and Cause to navigate the complexities of modern media world
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Slide 37: Rob Norman, CEO, GroupM Interaction Worldwide
Rob Norman CEO, GroupM Interaction Worldwide
Slide 38: Marketing's Perfect Storm
Marketing’s Perfect Storm Mass Mass Big production media retail
Slide 39: The Consumer Strikes Back
The Consumer Strikes Back Multi-channel Personalization Fragmentation distribution and and speed and interaction conflict A new world order
Slide 40: Communication space / Shelf space
Communication space Shelf space Sample Census Prediction Intention Context Behavior Brand as publisher Community as publisher Audience Hive Buyers Arbitrageurs Interrupters Integrators
Slide 41: A New Kind of Integration for Success
A New Kind of Integration for Success C C o o n n t t e DATA e x n t CENTER t Currency
Slide 42: Our Mission Remains Unchanged
Our Mission Remains Unchanged Increase the efficiency of changing minds Reduce the costs of selling goods
Slide 43: We Were
We Were The world’s largest vertically and regionally integrated commercial message distribution business
Slide 44: We Have Become
We Have Become A major data management center The world’s largest A major producer and vertically distributor of branded and regionally integrated and entertainment content commercial message across all analog and distribution business digital channels A significant component of the distribution cha
Slide 45: Complexity Increases Demand
Complexity Increases Demand GroupM Across WPP More channels More channels More optimization More messages More transactions More formats to More flexible value develop chain More content More distribution required opportunities More research
Slide 46: Our Challenge
Our Challenge To continue to leverage our physical and intellectual scale to consolidate opportunity in fragmented markets
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Slide 48: WPP Today
WPP Today Long Tail and Social Targeted Advertising Media Mobile Online Video In-Game Advertising Interactive Agencies
Slide 49: Mark Read
Mark Read Director of Strategy, WPP CEO, WPP Digital First worked at WPP parent company and then at Ogilvy and Hill & Knowlton (1989 – 1994) Founder of WebRewards in UK Principal at Booz-Allen & Hamilton Rejoined WPP in 2002 as Director of Strategy and CEO WPP Digital Joined WPP Board in 2005
Slide 50: Mark Read, Director of Strategy, WPP
Mark Read Director of Strategy, WPP CEO, WPP Digital
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Slide 52: Slide 52
Slide 53: Slide 53
Slide 54: Role of WPP Digital
Role of WPP Digital to act as a catalyst for the Group to take advantage of the digital opportunity 1. Develop a leadership position on the digital opportunity for our people, clients and the industry 2. Identify and make acquisitions, strategic partnership and investments in the digital area 3. Dev
Slide 55: WPP Digital
W PP Digital
Slide 56: Our Digital Revenues
Our Digital Revenues US$m Digital Revenues (US$m) – Pre-24/7 Real Media 2500 $2317m 2000 $1746m 1500 $974m +32% 1000 $693m 500 +41% 0 2005 2006 2005 2006 “Narrow” or Pure Digital “Broad” Definition Revenues
Slide 57: Long Tail and Social
Long Tail and Social Targeted Advertising Media Mobile Online Video In-Game Advertising Interactive Agencies
Slide 58: Digital investments and businesses
In-video advertising, focusing on social networks Targetted TV advertising Search and blog reputation management In-game advertising Social networks Online advertising agency for local businesses
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Slide 60: Digital investments and businesses
In-video advertising, focusing on social networks Targetted TV advertising Search and blog reputation management In-game advertising Social networks Online advertising agency for local businesses
Slide 61: 24/7 Real Media overview
Leading global digital marketing company, founded in 1995. In 2006: – $200 million revenue (43% organic revenue growth) – $19.6 million EBITDA1 (101% growth) before stock compensation 400 employees across 20 offices in 12 countries with 61% outside US Three core businesses – Search Solutions: Provid
Slide 62: WPP Digital
WPP Digital