The boss of WPP, Mark Read, has announced he will step down, as the advertising agency, which was once the largest in the world, struggles against the rise of artificial intelligence and with its shares at their lowest level in about five years.
Read will leave WPP after more than 30 years, with just under seven spent in the top job. He will stay on as chief executive until the end of the year while the board starts to look for his successor.
WPP’s share price has shed about half of its value under his leadership, as the company has struggled against the rise of AI tech that helps companies to automate the creation of adverts.
The chair of WPP, the former BT boss Philip Jansen, said Read “played a central role in transforming the company into a world leader in marketing services”. Jansen, a City heavyweight, triggered speculation about Read’s position as chief executive when he joined as the chair at the start of the year.
“Philip knew what he needed to do,” one former WPP board member said. “He was brought in as a change agent, and it was a case of ‘when, not if’ Mark was going to go.”
Jansen and Read are understood to have had a good working relationship but the former BT chief immediately began canvassing executives about the company after the announcement of his appointment as chair, months before he officially took up the role.
“He was walking the corridors and meeting various people and getting advice from the ground up on what was working, what wasn’t,” one WPP executive said. “Quite a lot of his angles of inquiry were around administrative bloat. His body language is that of a clever-eyed, cold-eyed analyser.”
Last year the group lost its crown as the biggest ad agency in the world by revenue to its French rival Publicis. Omnicom and the rival group Interpublic agreed to combine in a $13.3bn (£10bn) deal, compared with WPP’s market value of £5.9bn.
WPP has lost a string of significant client work recently, including Coca-Cola’s media business in North America, and last week the US media conglomerate Paramount ended its two-decade relationship with WPP Media.
The Guardian has learned that Mars is set to announce the outcome of a $1.7bn global media planning and buying pitch for its snacking and pet care operations.
WPP is the incumbent on the business, which covers big brands such as M&M’s, Snickers, and Pedigree and Cesar. Two sources believe it is at risk of losing the global work to rivals.
WPP declined to comment, while Mars did not respond to a request for comment.
Russ Mould, the investment director at AJ Bell, said that the boardroom reshuffle could put WPP even more behind its rivals.
“The fact the company hasn’t got a replacement chief executive lined up would suggest chaos behind closed doors,” he said. “It could take another three to six months to find someone else, and by that point WPP’s more tech-savvy rivals could be even further ahead.”
Read took over in 2018 from Sir Martin Sorrell, who bought a small Kent-based maker of wire baskets in 1985 and built it into the world’s largest marketing services group. Sorrell left amid allegations of personal misconduct.
Sorrell has always strenuously denied wrongdoing, and departed WPP as a “good leaver”.
Read has overhauled the group over the course of his tenure, merging agencies and selling off some businesses, which has helped cut net debt.
However, the shares have lost more than a quarter of their value in the past year alone, as tech companies such as Google, Meta Platforms and Amazon have become dominant advertising names in their own right.
This month Meta, which owns Facebook and Instagram, said it would start helping advertisers fully create and target campaigns using AI tools, including images, video and text.
Weakness in WPP shares had also prompted speculation that it could become a takeover target by a bigger rival or an activist investor hoping to shake up the business.
Shares in WPP dropped 1.5% on Monday after the news of Read’s departure.
Mould added: “The share price falling further on Read’s departure news is a sign that investors are all too aware of the problems at hand.
“WPP’s culture is rooted in traditional advertising and the world has gone digital, leaving the company scrabbling to play catchup. Whoever replaces Read will have a big task in trying to modernise the advertising agency. WPP needs a complete overhaul, and that won’t come easily or quickly.”
