Digital Investor Day WPP
4th June, 2013 Introduction and overview
Paul Richardson, CFO, WPP Mark Read, CEO, WPP Digital
4th June, 2013 Today’s agenda
Introduction and Overview of WPP’s Digital Strategy 1.00 pm Paul Richardson, CFO, WPP Mark Read, CEO, WPP Digital
Global Digital Networks Ajaz Ahmed, CEO/ Tom Bedecarre, Chairman AKQA 1.40 pm Brandon Berger, Chief Digital Officer Ogilvy 2.00 pm Stewart Pearson, Vice-Chairman Wunderman 2.20 pm
Break 2.40 pm
Digital Growth Opportunities Brian Lesser, CEO Xaxis 3.00 pm Neil Stewart, CEO Salmon 3.20 pm
Data and Insight: Bringing it Together David Spitz, Managing Partner The Data Alliance 3.40 pm
Q&A 4.00 pm Today: New Markets, New Media and Consumer Insight
1: New Markets 2: New Media 3: Quantitative Today 30% Today 33%1 Today 50%
UK & Western Continental Europe Traditional Media
North America UK & Western Continental Europe Traditional Media Qualitative Asia Pacific, Latin America, Africa & Middle East, New Media Quantitative Central & Eastern Europe
1 Includes AKQA on pro forma full year basis Tomorrow: New Markets, New Media and Consumer Insight
1: New Markets 2: New Media 3: Quantitative Target 35-40% Target 35-40% Target 50%
UK & Western Continental Europe Traditional Media
North America UK & Western Continental Europe Traditional Media Qualitative Asia Pacific, Latin America, Africa & Middle East, New Media Quantitative Central & Eastern Europe Digital target now 35-40% revenues
WPP Share of Digital Revenue
35%- 33%¹ 40% 30%
21%
12%
2000 2006 2011 2012 Target in 5 years 1 Including AKQA Pro Forma Digital as the driver of industry growth Continued strong growth in digital ad spend: From 20% in 2012 to 26% in 2017
Worldwide Digital Advertising Spend 194 176 (US$ billions) 154 135 CAGR 2007-2012: 15% 114 2012-2017: 14% 99 85 75 59 64 49
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
11% 12% 15% 16% 18% 20% 21% 22% 23% 24% 26%
Source: GroupM, December 2012 Globally, significant growth ahead
Digital as a % of Total Ad Spend
50%
40% 34% 32% 28% 2017 22% 23% 22% 19% 2012 16% 12% 10% 6% 5%
UK Germany US China France India Brazil
Source: GroupM, December 2012 A world dominated by TV and digital % of total advertising spend by medium
13% 11% 13%
26% 18% 43% 20% 29% 3%
41% 43% 40%
2002 2012 2017 TV Digital Print Other
Source: GroupM, December 2012 Four key trends
• Mobile • eCommerce • Data • Social A mobile world: beyond advertising
Marketing Financial Automotive Healthcare services
Today around 1.5 billion smartphones out of 5 billion phones globally An eCommerce world: omni-channel marketing
20% Consumer eCommerce Share of Spend Forecasts 18% 16% 14% 2008 2012e 2016e 12% 10% 9.4% 8% 6.5% 6% 4% 4.0% 2% --%
Source: Morgan Stanley Consumer Internet Report, 2013 A social world: in time and dollars
>1B >1B monthly 400M users 360M active accounts unique users visitors
200M 200M 110M 100M users 50M users active members registered users users An increasingly data-driven world The next 5 years
• TV and Digital: growth across four screens • Mobile – the next 4 billion consumers • eCommerce and eShopper • Social – influence, reputation, branding & sales • Data and analytics (privacy) • Importance of technology WPP’s Digital Strategy WPP is 7th biggest digital media company in the world Position Company name Sector Digital Revenue 1 Google Search $36.4B 2 China Mobile Telco $7.6B 3 Bloomberg Business information $7.0B 4 Reed Elsevier Business information $5.9B 5 Apple Diversified $5.4B 6 Yahoo Diversified $5.0B 7 WPP Advertising $4.7B 8 Thomson Reuters Business information $4.7B 9 Tencent Diversified $4.5B 10 Microsoft Diversified $3.9B 11 Facebook Social networks $3.7B 12 Sony Diversified $3.7B 13 Pearson Business information $3.1B 14 Dentsu Advertising $2.9B 15 Omnicom Group Advertising $2.8B 16 China Telecom Telco $2.7B 17 Baidu Search $2.3B 18 Publicis Groupe Advertising $2.2B 19 Netflix Video $2.0B 20 News Corp Diversified $1.9B Source: PaidContent (July 2012) Our strategy focused on what clients want • Strong creative ideas that exploit the one-to-one, social and interactive potential of digital media
• Increasingly new and specialist skills in mobile, social media, ecommerce, eshopper, etc.
• Digital everywhere – from the idea through to each channel and integrated across brand and direct response
• Efficiency through technology, platforms and production solutions, e.g., Deliver
• ROI – quantifiable impact and scale in media • Connected data – across website, mobile, media, store… WPP’s digital offer: beyond advertising Digital Media Mobile Audience Buying Mobile web development Paid and Organic Search Mobile and tablet applications Social Media -- Facebook, Twitter Mobile media, e.g., coupons, locations
Social Media Data and Analytics
Social media campaigns, eg., Facebook Real-time data analysis Social media analysis and monitoring Tracking and targeting Content creation Integration of multiple data sources
Web Development Digital Platforms Web sites Web marketing platforms Intranets Media buying platforms eCommerce Data management platforms Offshore digital production Key digital clients New services offer greater revenue potential Share of Client Expenditure to Agency and Media Owner 100%
80% 40-45% 88% 80-85% 60% Media Share 40% 55-60% Agency 20% Share 12% 15-20% 0% Traditional Media Search/Display Mobile/Social Media
Source: Exane BNP Paribas April 2010 Today: 33% of revenues with strong competitive position
Digital Revenues ($billion – 2012 Full Year)
5.4
2.8 2.8
1.0 0.6
WPP Omnicom Publicis IPG Havas
¹ Peer digital revenue according to Ad Age %’s applied to FY US$ revenue. WPP’s Digital Strategy
Digital Everywhere Digitise our “traditional” businesses through training, recruiting, acquisitions and investments
Exploit New Launch new services in high-growth areas such as Opportunities ecommerce and digital media -- and the growing digitisation of business in every sector
Leverage Data Build common technology platforms using own and licensed technology that exploit the power of data
Partner with Digital Create strong partnerships with digital leaders such as Leaders Google, Facebook, Microsoft, Twitter and technology companies such as IBM and Adobe Strong global digital businesses
2012 Revenue Network People $’m (F) 1,000 6,500
(F) 950 6,500
350 1,000
300 2,000
(F) 200 1,000
150 1,000
(F) 150 1,000 Dominant BRIC position
Revenue $60m Russia ~600
Revenue $50m Revenue $200m Revenue $200m India ~1200 China ~2500 Brazil ~1400 Diversity of Asia: Digital Landscape
40% 538m 23% 293m 80% 101m 20% $13bn 99% 125m $190bn 23% $13bn $140bn 22% 55m 11% 137m 19% 48m 6% 71m 5% $100m 6% $350m $1bn $14bn 89% 20m 56% 13m 24% $3bn
Sources: Internetworldstats.com, Mckinsey, $44bn Boston Consulting Group, Groupm TYNY Diversity of Asia: Internet Players Global AND Local approach Breadth of China Digital Resources
• Digital creative for global and local clients including Ford, Nike, Diageo, Yili, COFCO, Anta, Sina • Mobile marketing and applications for Starbucks, VW, China Mobile, P&G • eCommerce sites for alibaba, Nike, P&G, Pepsi • Very strong digital research business – Online media measurement for Mars, P&G, VW via Miaozhen Systems and Millward Brown – Social media monitoring for Nike, Unilever, Haier, P&G, Chanel • GroupM is the leading media buyer on digital platforms • Xaxis launched in China in 2012 New services: Digital Media
. Annual billings in excess of US $400 million. . 300 employees across 22 markets. . Over 300 billion impressions annually. . 1,000+ clients. . 56% billings growth year over year. . 1 technology platform, 50 integrated partnerships. . 6 channels: display, video, mobile, social, radio, out-of-home . 1 Vision: Be the No. 1 Global Audience Buying Company. New services: eCommerce
. Multi-channel, multi-country, multi-device and multi- brand systems . Europe’s largest IBM WebSphere Commerce services business . 3rd party software skills: Oracle, Omniture, Autonomy etc . More than 400 staff in London, Beijing and Sydney . £3B revenue through Salmon supported sites each year Technology as a source of competitive advantage
. WPP’s proprietary platform integrates 24/7 Media’s core technology with best of breed partner technologies to create unique digital marketing platform that provides a competitive advantage to WPP advertising clients. . Opportunities for enhanced collaboration with clients by leveraging data and technology. . Peers reliance on Google’s technology enables Google’s disintermediation strategy; all data and technology strategies must pass through competitor’s platform. Growing Display Billings on 24/7 Media Technology $ millions $1,289
$1,004 $839
2010 2011 2012 WPP as a venture investor
Marketing In-game Ad Data & effective- eCommerce Content advertising Networks Technology ness
1
Previous 1 investments:
Note: ¹Partial exit Partnering with media and technology leaders Digital Media Partners Technology Partners The Digital Growth Opportunity for WPP Digital and Faster Growing Markets as long-term growth drivers
Overall 54% of 2012FY Actual Revenues
Faster-growing Digital markets 6 32% 30% of revenue (1) of revenue
Digital in faster-growing markets 8%
1 33% including AKQA with minimal impact on overlap implying 55% combined of revenue Strong organic digital growth
Annual Organic Growth Rates
2008 2009 2010 2011 2012
Share of digital 25% 27% 29% 30% 32%
Like for like revenue growth
Digital 11% 1% 11% 9% 7% Total WPP Group 3% -8% 5% 5% 3% Our investment focus on digital/faster Europe growth markets AKQA (Global) 41?29! Media (Turkey) Activeark Oy (Finland) USA C-Section (Turkey) Carnation (Hungary) Ace Metrix (USA) Core (Sweden) ADGOOROO (USA) Fortune Cookie (UK) Affectiva (USA) Frey G2 (Germany) Corda (USA) Grape (Russia) Hogarth (UK) EffectiveUI (USA) K102 (Germany) Enprecis (USA) KKLD* (Germany) First Loom (USA) MySupermarket.com (UK)² Raine (USA) Predictys (France) Say Media(USA) Press Index SA (France) Videology(USA) APAC Salmon (UK) ZEG (Germany) Visible Technologies (USA) ASTUS (HONG KONG) BIENALTO (Australia) LatAm CBC (China) Middle East, Africa CIC Data (China) Converge (Pakistan) Foster (Brazil) Barrows (S Africa) DTDigital (Australia) Globant (Argentina) GME (Dubai) EYE (Australia) Rep/Massive (Colombia) Strike Media (S. Africa) FILMWORKS (China) Smollan (S Africa) Hungama (India) Netbooster (Philippines) Oasis Insights (Pakistan) PLAY (Australia) PT Magnivate (Indonesia) Qais (Singapore) Wisereach (China) In summary
• Continued strong secular transition to digital Strong • Agency revenues benefit relative to paid media Growth • Margins at or above WPP benchmarks
• 33% of revenues from digital activities Leading • Strong global digital brands • Strength from client relationships and ability to combine Position creativity and technology • Growing partner to innovative clients
New • Xaxis in the application of technology to media • Beyond advertising into ecommerce and innovation Opportunities • Combination of data and technology – “Big Data” Today’s agenda: Digital Everywhere
$16.7 billion . Ajaz Ahmed/ Tom Bedecarre – CEO/ Other – 16% Chairman – AKQA . Stewart Pearson – Vice-Chairman, Direct & Digital Wunderman – 19% . Neil Stewart – CEO, Salmon Media – 19% . Brian Lesser – CEO, Xaxis
Advertising . Brandon Berger – Chief Digital Officer, – 22% Ogilvy
Consumer . David Spitz – Managing Partner, The Insight –24% Data Alliance
2012 Revenue