Does WPP reporting its worst year since the 2009 recession indicate troubling times ahead for adland?

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Does WPP reporting its worst year since the 2009 recession indicate troubling times ahead for adland?

YES – Martin Woolley, chief executive at The Specialist Works.

WPP’s results are stunning, although not entirely surprising. The fundamentals of the advertising world have been changing for 20 years. That is when digital advertising, led by Google, first shook the established principles (typified by the apocryphal “half of my advertising works, I just don’t know which half” statement).

Apple changed the game again with the iPhone. These are the world’s largest companies because their products fundamentally changed how consumers act and buy. WPP and its fellow behemoths were unwilling and unable to change their models quickly enough to catch up with this new reality. They defended their income in ways that did not put their customers – the advertisers themselves – first.

Advertisers have realised this, and 2017 will go down in history as the beginning of the end for the massive holding groups. Expect smaller, client-focused business to take more market share. This has begun and will accelerate. Also expect more large advertisers to take advertising, particularly digital, in house.

Read more: "Not a pretty year": WPP temporarily suspended after share price plunge

NO – Peter Reid, chief executive of MSQ Partners.

Not everyone is suffering. The report says much more about the structural problems the holding companies face, with WPP’s model increasingly appearing outdated. Martin Sorrell rightly diagnosed the problem – that the current environment needs simplicity, flexibility, and access to multiple disciplines – but he is no closer to finding a solution.

He is also right that agency groups must break down silos and bring together talent across creative, media, strategy and public relations specialisms to seamlessly serve clients, but WPP is miles away from being able to deliver on this. Agency loyalties and identities, incentive structures, geographic locations, cultures and mindsets all make this a distant nirvana for the large holding companies.

Instead, it is increasingly clear that the future belongs to the more entrepreneurial mid-sized groups who have the scale and range of specialisms to credibly meet the range of a client’s needs, but also the agility and flexibility to seamlessly bring together multi-disciplinary teams designed around the client’s unique requirements.

Read more: Boss of $100m WPP 'Superunion' Jim Prior on the trials of consolidation

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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