WPP is set to be relegated from the FTSE 100 after nearly 30 years, as the advertising giant struggles to stem an exodus of clients and match the artificial intelligence and data capabilities of rivals.
WPP, once the world’s largest advertising group, has seen its market valuation plummet from around £24bn in 2017 to just £3.1bn.
The company has also seen its share price plunge two-thirds this year and is expected to be relegated from the blue chip index when the next quarterly reshuffle is officially announced after stock markets close on Wednesday afternoon.
WPP has issued two profit warnings this year and Cindy Rose, who took over as chief executive after Mark Read was ousted in June, has launched a strategic review, admitting that the company has “not gone far enough or fast enough in adapting to the evolving needs of our clients”.
Founded in 1985 by Sir Martin Sorrell, who built a global advertising powerhouse out of a small, Kent-based maker of wire baskets, WPP has been in the FTSE 100 since 1998.
“I was in the room with Sorrell when the business entered the FTSE 100 … the jubilation,” said Alex DeGroote, a media analyst. “This is a moment, the end of an era really. It is sad; advertising … is an industry where Britain had a global leader. To fall out is pretty ignominious and there is no obvious route back.”
WPP is investing heavily in AI tools but has been slow to adapt to a changing market and is being heavily outgunned, principally by France’s Publicis Groupe, which took its crown as the biggest ad group in the world by revenue last year.
Given the parlous state WPP is in, analysts believe that Rose may only have a year to turn the business around, or break up the company, which has become a potential takeover target.
British Land, the most valuable company in the FTSE 250, looks set to be promoted to the FTSE 100 to take the spot vacated by WPP.
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In September’s reshuffle, housebuilder Taylor Wimpey – led by Jennie Daly – was relegated from the FTSE 100. Daly’s departure, and the relegation of Rose’s WPP, will leave just seven female chief executives in the blue chip index. GSK boss Emma Walmsley and Severn Trent chief Liv Garfield, both longstanding FTSE CEOs, have recently announced their departures.