WPP has been relegated to the FTSE 100 after nearly 30 years, as the advertising giant struggles to stem the exodus of clients and match the artificial intelligence and data capabilities of rivals.
The market value of WPP, once the world’s largest advertising group, has fallen from around £24bn to $3.1bn in 2017.
The company’s share price has risen by two-thirds this year and has been pegged to the blue-chip index after a quarterly reversal, confirmed when stock markets closed on Wednesday afternoon.
British Land, which was the most valuable company in the FTSE 250, was promoted to the FTSE 100 to take the place vacated by WPP. The property company’s shares have risen 17 percent this year, to value it at more than $4 billion.
WPP has issued two profit warnings this year and Cindy Rose, who took over as chief executive after Mark Reid was ousted in June, has undertaken a strategic review, admitting the company was “not fast enough or fast enough to adapt to the evolving needs of our clients”.
WPP, founded in 1985 by Sir Martin Sorrell, who built a global advertising powerhouse out of a small, Kent-based wire basket maker, has been in the FTSE 100 since 1998.
“I was in the room with Sorrel when I got into the business FTSE 100,” said media analyst Alex DeGroot. “It’s a moment, the end of an era really. It’s sad. Advertising… is an industry where Britain used to be a world leader. It’s a disgrace to get out and there’s no clear way out.”
WPPAI has been investing heavily in tools but has been slow to adapt to a changing market, and this has been particularly illustrated by France’s Publis Group, which last year took its crown as the world’s largest advertising group by revenue.
Given WPP’s parlous state, analysts believe Rose may have just one year to turn the business around — or break up the company, which has become a takeover target.
After the newsletter is advertised
Housebuilder Taylor Wimpey, led by Jenny Daly, was linked to the FTSE 100 in September’s reaction. Daley’s departure, and Rose’s WPP fellowship, will leave just seven female chief executives on the blue-chip index. GSK boss Emma Walmsley and Severn Trent chief Leo Garfield, both longtime FTSE CEOs, have recently announced their departures.
