Wpp Plc · LSE:WPP
Wpp — Shareholder Meeting (June 2008)
75 slides from Wpp's shareholder meeting presentation, June 2008
Slide 1: AGM 2008
_ [AGM 2008 ii ANN) f
Slide 2: Philip Lader, Chairman
Philip Lader Chairman
Slide 3: AGM 2008
_ [AGM 2008 ii ANN) f
Slide 4: Sir Martin Sorrell, CEO
Sir Martin Sorrell CEO, WPP
Slide 5: Strategic Priorities
Strategic Priorities Shorter term: to capitalise on the maxi-quadrennial benefits of 2008 and withstand potential recessionary or slow- down pressures in 2009 Longer term: to continue to develop our businesses in the faster- growing geographic areas of Asia Pacific, Latin America, Africa and the Mid
Slide 6: Key Priorities, Objectives and Strategy
Key Priorities, Objectives and Strategy Faster growing markets to be one third of total group against approximately 25% now (31% with 100% of associates) Marketing services to be two thirds of total group against approximately 55% now Quantitative disciplines to be one half of total group againts ap
Slide 7: Faster Growing Markets To Be One Third of Total Group
Key Priorities, Objectives and Strategy Faster Growing Markets To Be One Third of Total Group Today1 Today including Tomorrow associates1 25% 32% 31% 33% 34% 37% 38% 37% 33% North America Europe Faster Growing markets ¹ Based on full year 2007 reported revenue
Slide 8: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position Brazil, Russia, India and Greater China (BRICs) and the Next 11 account for approximately 13% of WPP revenue today According to Goldman Sachs research, Dreaming with BRICs*, these countries will grow at 10.4% CAGR through 2015 According to GroupM, ad spen
Slide 9: WPP's Performance Strong in BRIC Markets
Key Priorities, Objectives and Strategy WPP’s Performance Strong in BRIC Markets Revenue $’m 600 500 Associates @ 100% 400 300 200 100 0 2000 2006 2007 2008 2000 2006 2007 2008 2000 2006 2007 2008 2000 2006 2007 2008 Budget Budget Budget Budget China (including Hong Brazil India Russia Kong and Taiw
Slide 10: WPP's Performance in Other Faster Growing Markets
Key Priorities, Objectives and Strategy WPP’s Performance in Other Faster Growing Markets Revenue $’m 400 Associates @ 100% 300 200 100 0 2000 2006 2007 2008 2000 2006 2007 2008 2000 2006 2007 2008 2000 2006 2007 2008 Budget Budget Budget Budget Middle East Eastern Europe Indonesia Vietnam
Slide 11: Strategy, Structure and Competitive Position
Strategy, Structure and Competitive Position Faster Today Faster 2015 Growing Growing Markets Markets 12% BRIC 15% North North America 8% America 39% 37% BRIC 25% 24% Europe* 14% 14% 12% UK Europe* UK * Europe excludes Central and Eastern Europe Assumes Brazil, Russia, India and China GDP growth of
Slide 12: Marketing Services To Be Two Thirds of Total Group
Key Priorities, Objectives and Strategy Marketing Services To Be Two Thirds of Total Group Today1 Today including Tomorrow associates1 33% 54% 46% 53% 47% 67% Marketing Services Advertising & Media Investment Management ¹ Based on full year 2007 reported revenue
Slide 13: Quantitative Disciplines To Be One Half of Total Group
Key Priorities, Objectives and Strategy Quantitative Disciplines To Be One Half of Total Group Today1 Today including Tomorrow associates1 33% 33% 50% 50% 67% 67% Information, Insight & Consultancy and Direct, Internet & Interactive Advertising, Media Investment Management & Other Marketing Services
Slide 14: Strategic Objectives
Strategic Objectives We continue to focus on our key objectives Improving operating margins Increasing flexibility in the cost base Using free cash flow to enhance share owner value, and improve return on capital employed Developing the role of the parent company Emphasising revenue growth more as m
Slide 15: Historic Headline PBIT and Margins
Historic Headline PBIT¹ and Margins PBIT1 £’m PBIT1 margin % 1000 Long-term IFRS target 19% 20% 800 14.0% 14.5% 15.0% 16% 14.0% 14.1% 13.0% 12.3% 859 928 14.5% Objectives: 600 13.0% 755 12% 2009 16.0% 561 534 560 2008 15.5% 400 480 8% 200 4% 0 0% 2001 2002 2003 2004 2005 2006 2007 PBIT Margin - Full
Slide 16: Financial Model
Financial Model Revenue growth in line with the market (0%-5%) Operating margin up 0.5 margin points each year PBIT growth of 5%-10% per annum Use of free cash flow via share buy-backs of up to 5% of share capital and small to mid sized acquisitions to supplement growth Target EPS growth of 10%-15%
Slide 17: Earnings and EPS
Earnings and EPS¹ Earnings (£m) 46.0p 10% 42.0p 17% 500 36.0p 32.3p 29% 400 11% 29.0p 27.9p 22% 300 23.8p 200 100 0 2002 2003 2004 2005 2006 2007 2004 UK GAAP IFRS ¹ Diluted Headline Earnings and Diluted Headline EPS
Slide 18: 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. 58% of revenue – Property c. 7% of revenue – Bought in services c. 22% of revenue Increased flexibility in all areas important to combat any future economic slowdown
Slide 19: Increasing Flexibility in the Cost Base
Increasing Flexibility in the Cost Base Change In Variable Costs 14 2002 2006 2007 12 10 8 % 6 9.2 13.0 12.7 4 5.3 7.7 7.4 2 0 Variable Staff costs as % of Staff costs Variable Staff costs as % of Revenue
Slide 20: Using Free Cashflow to Enhance Share Owner Value Acquisitions
Using Free Cashflow to Enhance Share Owner Value Acquisitions Focus on the faster growing geographical areas and marketing services, particularly direct, internet & interactive and information, insight & consultancy During 2007 40 small and mid size acquisitions were completed in executing this stra
Slide 21: Using Free Cash Flow to Enhance Share Owner Value
Using Free Cash Flow to Enhance Share Owner Value Share Repurchases 2007 dividend raised by 20% Dividends Amount % of Share Base to 13.45p per share Paid Distributions to share owners: 2000 £25.6m £94.1m 1.3% 2001 £44.4m £103.3m 1.4% 2002 £55.6m £75.9m 1.1% 2003 £67.0m £23.1m 0.5% 2004 £81.7m £88.7m
Slide 22: Distributions to Share owners
Key Priorities, Objectives and Strategy Using Free Cashflow to Enhance Share Owner Value Distributions to Share owners¹ PBIT1 £’m 600 6.4% Dividends Repurchases 500 400 4.8% 415 300 3.6% 258 200 1.8% 2.7% 2.0% 152 100 1.6% 89 103 76 23 100 119 139 44 56 67 82 0 2001 2002 2003 2004 2005 2006 2007 ¹ S
Slide 23: 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, e.g., Market Res
Slide 24: Improving the Creative Capabilities and Reputation
Improving the Creative Capabilities 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 25: WPP Today
WPP Today Revenue £6.2bn PBIT £928m Branding & Media Information, Public Identity, Advertising Investment Insight & Relations & Healthcare and Management Consultancy Public Affairs Specialist Communications Revenue Revenue £2.9bn Revenue £905m Revenue £641m Revenue £1.8bn Broader £1.4bn PBIT £467m P
Slide 26: Two Major WPP Opportunities
Two Major WPP Opportunities Geographic Technological
Slide 27: WPP Today: New Technology
WPP Today New Technology Ogilvy WPP Digital Wunderman OgilvyOne G2 rmg Interactive CEO: Mark Read Interactive Blast Radius Neo@Ogilvy 24/7 Real Media¹ Blue Schematic Syzygy² Quasar Loyalty & Web Content Portal Search Software Information Data Mining Sports Rel. Mktg Dev’t ¹ 24/7 Real Media acquired
Slide 28: New Media Showcase
New Media Showcase
Slide 29: 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 then became CEO WPP Digital in 2007 Joined WP
Slide 30: Mark Read, WPP
Mark Read WPP
Slide 31: Sustained Global Shift to Digital Media
Sustained Global Shift to Digital Media Global Online Advertising Revenue (dollars in billions and % of total ad spend) $71.1 GR = 19% r oject ed C A $58.6 4Y r P 15.0% $45.9 13.0% $33.4 11.0% $23.9 8.0% 6.0% 2005 2006 2007 2008F 2009F Source: GroupM Estimates, including search (May 2008)
Slide 32: How are we doing?
How are we doing? WPP Proforma Digital Revenues (US $million) USD ($m) 3,000 $2,793 2,500 $2,317 2,000 1,500 $1,439 +21% $974 1,000 $700 +48% 500 $300 0 2000 2006 2007 Narrow Broad
Slide 33: The world's leading digital agency portfolio
The world’s leading digital agency portfolio Regional Specialists Global Agencies * * Minority ownership in Syzygy; all others are fully owned and operated by WPP
Slide 34: Digital is changing marketing
Digital is changing marketing Impact of social media on how marketers build brands So-called developing markets embrace digital Mobile may be much more developed in markets such as India Video changing online marketing
Slide 35: Gurval Caer, CEO, Blast Radius
Gurval Caer, CEO, Blast Radius Graduated from the Ecole Superieure de Commerce de Dijon with a business degree and worked for Ernst &Young in France Moved to Canada to study new media at the prestigious Vancouver Film School, where he later became a well-respected teacher As one of the original foun
Slide 36: Harish Bahl, CEO, Quasar
Harish Bahl, CEO, Quasar Computer engineer, serial entrepreneur & e- business strategist Found Smile Interactive Technologies Group, one of India's first Internet Business Solutions companies in 1999. Under his leadership, SITG developed leading businesses like StudioSmile (new business incubations)
Slide 37: Trevor Kaufman, CEO, Schematic
Trevor Kaufman, CEO, Schematic Selected as part of AdAge’s “Digital A-list” and Newsweek’s “Net 50: The Fifty People Who Matter Most on the Internet” Has fearlessly guided Schematic to become one of the world’s fastest growing and most innovative interactive agencies Industry expert in the convergen
Slide 38: AGM 2008
~ TAGM 2008
Slide 39: Gurval Caer, CEO / President, Blast Radius
Gurval Caer CEO / President, Blast Radius
Slide 40: 10 years
10 years San Francisco Vancouver New York London Amsterdam Toronto Started in 1996 with $5000 Focused on the Old Economy Acquired by WPP in Oct 2007 Today 400 people working with the greatest brands
Slide 41: Client Experience
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Slide 42: Canadian new media awards
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Slide 43: A Revolution of the people, by the people, for the people
A Revolution of the people, by the people, for the people
Slide 44: We've Come A Long Way...
We’ve Come A Long Way... “…(Today) MySpace, Flickr and all the other newcomers aren't places to go, but things to do, ways to express yourself,means to connect with others and extend your own horizons. Cyberspace was somewhere else. The Web is where we live.”*
Slide 45: Taking The Next Step
Taking The Next Step Brand as Service Customer Value Proposition: Provide a platform for our target consumers to quickly Objective: Create Brand find and share solutions to emotional attachment Conversations their problems, give them a to the brand through voice for the products they intimacy and us
Slide 46: Know How
Know How
Slide 47: Taking The Next Step
Taking The Next Step Brand as Service Customer Value Proposition: Provide a platform for our target consumers to quickly Objective: Create Brand find and share solutions to emotional attachment Conversations their problems, give them a to the brand through voice for the products they intimacy and us
Slide 48: breakfastclub
breakfastclub
Slide 49: Jordan Breakfast Club
Jordan Breakfast Club Consumers are able to design custom training programs from Michael Jordan’s personal trainer. They are then able to download the programs to their iPod or mobile device so that the experience is always available.
Slide 50: Connecting with athletes, connecting athletes to each other
Connecting with athletes, connecting athletes to each other
Slide 51: Taking The Next Step
Taking The Next Step Brand as Service Customer Value Proposition: Provide a platform for our target consumers to quickly Objective: Create Brand find and share solutions to emotional attachment Conversations their problems, give them a to the brand through voice for the products they intimacy and us
Slide 52: Google Video Syndication
Google Video Syndication Blast Radius actively syndicates and places content online, so that it doesn’t need to be “stolen”. We have placed it on Google, YouTube, and other video sites before anyone else does. We have also provided easy-to-use blogging tools. And we work with industry- leading offer
Slide 53: Melo Trailer on yardbarker.com
Melo Trailer on yardbarker.com We have embraced the fact that content will find its way outside of the control over brand. The challenge is on us as marketers to make it compelling enough, such as the widely viewed and video blogged trailer we created for Melo’s Elevate Your Game campaign.
Slide 54: Melo Trailer on yardbarker.com
Melo Trailer on yardbarker.com “Man that commercial is off the chain. Really the entire site is great.” – Markk4250 “I think they should put MP3's on their site, or at least make like a $5 soundtrack available for purchase on Jumpman23.com. I would buy it for sure.” – Mossified842345 “WOW i wasn’t g
Slide 55: Taking The Next Step
Taking The Next Step Brand as Service Customer Value Proposition: Provide a platform for our target consumers to quickly Objective: Create Brand find and share solutions to emotional attachment Conversations their problems, give them a to the brand through voice for the products they intimacy and us
Slide 56: Jordan brand website
Slide 57: Slide 57
Slide 58: AGM 2008
~ TAGM 2008
Slide 59: Harish Bahl, Quasar
Harish Bahl Quasar
Slide 60: Quasar
Slide 61: Map of Digital India
Map of Digital India World’s 4th largest economy in terms of PPP Internet Users ** 46 million Penetration - 4% Y/y growth* - 41% World’s 5th largest internet population Mobile Users ** 260.7 million Penetration - 23% Y/y growth* - 82% Mobile internet users – 22 million` Total Eyeballs – 68 million *
Slide 62: Facts and firsts
Leading digital media and eBusiness services company in India Largest crew of digital specialists with multi city presence in India facts Over 15% market share Working relationship with over 42 blue chip companies – both multinational & domestic Travel Entertainment E- Consumer Distributor Durables
Slide 63: The Opportunity – Mobile Marketing
The Opportunity – Mobile Marketing Base for Global Learning Over 8 million new subscribers every month More people are expected to see Internet first on mobile than computer Call rates in India are the cheapest at up to 1 cent / minute Hot spot on wheels A public bus, carries a mobile Steve Ballmer
Slide 64: The Opportunity - Digital Outsourcing Hub
The Opportunity - Digital Outsourcing Hub * Forrester Research
Slide 65: AGM 2008
~ TAGM 2008
Slide 66: Trevor Kaufman: The Opportunity for WPP in Online Video
Trevor Kaufman CEO, Schematic The Opportunity for WPP in Online Video
Slide 67: Online Video's Phenomenal Growth
Online Video’s Phenomenal Growth Online video is growing both as an experience (i.e. streaming), and as a delivery mechanism (i.e. downloads)
Slide 68: Online Video's Phenomenal Growth - Streaming
Online Video’s Phenomenal Growth - Streaming YouTube, the most popular video sharing site, features 78.3 million videos, with over 150,000 videos being uploaded every day - it would take over 400 years to watch them all. 55 million people watch YouTube every month, averaging over two hours each Whil
Slide 69: Online Video's Phenomenal Growth - Downloads
Online Video’s Phenomenal Growth - Downloads Between January 2006 and 2007, iTunes doubled its iTunes cumulative song sales from one billion to two billion, but more than tripled video sales from 15 million to over 50 million downloads These statistics pre-date many forms of video portability, e.g.
Slide 70: Online Video and Schematic
Online Video and Schematic Schematic is a full-service digital marketing services firm, specializing in building branded experiences for clients. Online video, including the interfaces in which it is delivered and the business models behind it, is a particular specialty of the company We employ 350
Slide 71: Online Video and Schematic
Online Video and Schematic The growth of online video creates tremendous opportunities for Schematic and other agencies: – to develop the services that deliver video, – the advertising that creates the underlying business model, – and new uses of video that drives our clients’ brands and revenue
Slide 72: h th:
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Slide 73: Olympic video site
UNITED Ecc y Pht T VIDEO SPOTLIGHT: Day blazes to Trials victory 5 reasons to watch Gymnastics as springboard to new career Featured Video ALL SPORTS SIGN UP FOR LIVE OLYMPIC VIDEO Enter ZIP Code PLUS: Bonus local coverage from Olympic Zone, Search Video comprehensive TV and online listings E and mo
Slide 74: pnt
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Slide 75: AGM 2008
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