Dive Brief:
- Ford Motor Co. confirmed to The Wall Street Journal that it's putting part of its advertising account up for review, which could deal a considerable blow to the embattled and incumbent agency WPP.
- Ford has been one of WPP's top clients for decades, generating more than $500 million in annual revenue for the ad holding group, per the Journal. However, the automaker began rethinking its marketing strategy months ago. Company officials have said they're looking to save $200 million annually on marketing and also to focus more on digital technology and data analytics to better target consumers.
- GTB, WPP's dedicated agency for Ford, made the announcement to its employees via a memo sent on April 20, the Journal reported. Ford will be able to seek pitches from outside of WPP on segments of its marketing business. Ford's account with WPP in China and its U.S. dealer business are among the functions not being put up for review and will be retained by WPP. The automaker spent $1.22 billion on U.S. media in 2017, not including social media spending, according to Kantar Media data cited by the Journal.
Dive Insight:
WPP potentially losing a chunk of its business with Ford will only further stoke speculation of a break up of the ad holding company, one of the world's largest and also one in fairly dire business straits. Over the past several years, WPP has lost major clients, including AT&T, Volkswagen and American Express. It reported flat like-for-like, top-line growth in 2017 and flat operating margins and profits, marking the company's worst performance in nearly 10 years.
Earlier this month, WPP CEO Martin Sorrell also stepped down after more than three decades growing the company into a formidable giant in the advertising world. His departure followed an internal probe into allegations of financial impropriety and personal misconduct that, despite turning up no findings of wrongdoing, has set WPP and the industry as a whole on a tilt.
The latest news underscores the ongoing difficulties traditional ad holding companies like WPP face with digital disruption — Ford has specifically called out a desire for better technology and analytics in its marketing — along with allegations of misuse of client fees and increasing competition from other marketing services providers like consultancies. More major brands are additionally looking to increase efficiency and transparency with their agency partners and some, like Procter & Gamble, are bringing marketing functions in-house while at the same time trimming down the number of agencies they work with.
