WPP to divest assets and reduce workforce in major overhaul to tackle AI challenges.

The troubled UK advertising giant WPP has initiated a significant restructure in response to the encroaching influence of artificial intelligence (AI) on the industry, which includes plans for asset sales and workforce reductions.

WPP aims to become “a simpler, lower-cost, AI-enabled business,” detailing a strategy that projects £500 million in annual savings by the year 2028, albeit with an initial expenditure of £400 million over two years to facilitate this transformation.

Cindy Rose, who stepped into the role of chief executive last summer, emphasized that the unveiling of this “bold plan for a simpler, more integrated WPP that’s fit for the future and built to win” has become imperative. The organization has faced substantial challenges, including a notable exodus of clients and is currently racing to enhance its AI and data capabilities to keep pace with competitors. There are growing concerns that AI advancements may enable clients to internalize more marketing functions.

While Rose did not disclose specific assets targeted for disposal, she did indicate that several have been identified for this purpose.

A large segment of the projected cost savings will likely stem from workforce reductions. Although the company refrained from providing details on the number of jobs to be cut from its workforce of approximately 100,000, it confirmed plans to eliminate overlapping roles in finance and support as well as reduce organizational hierarchy.

Historically, WPP’s most extensive cuts involved 7,200 job losses during the global advertising recession of 2009 and another 7,000 positions eliminated in 2020 due to the COVID-19 pandemic.

Much of the savings are slated for reinvestment in “high-growth” sectors, including a new division focused on collaborating with clients in AI transformation. This initiative, named enterprise solutions, has already onboarded over 1,000 employees.

In an effort to streamline operations, the troubled company is reorganizing its vast business structure, which comprises hundreds of units, into four primary segments: media, creative, production, and enterprise solutions, with a geographical focus on North America, Latin America, Europe, the Middle East and Africa, and Asia Pacific.

Under the WPP Creative umbrella, various ad agencies such as Ogilvy, VML, and AKQA will consolidate operations while maintaining their identities as separate agencies. This approach is aimed at reducing costs through shared back-office functions.

Rose, who previously discussed potential job cuts shortly after her appointment, commented: “Our recent underperformance has stemmed from excessive organizational complexity, a lack of an integrated operating model, and inconsistent strategic execution. While this is disappointing, I see significant potential for improvement as these challenges are within our control and we are making substantial headway.”

These remarks followed the recent financial report, which showed WPP experienced a 3.6% decline in comparable revenue, totaling £13.6 billion for the fiscal year 2025, with pre-tax profits plummeting by 26% to £1.1 billion.

The performance of WPP’s advertising agencies deteriorated in the fourth quarter, a downturn exacerbated by client losses in both the US and UK, alongside further challenges in Europe and declines in China. However, this was somewhat mitigated by improving results in India and Australia as reported by the company. To maintain financial stability, they reduced their dividend for 2025 by 62% to 15p.

Despite securing new contracts from significant clients such as Jaguar Land Rover and Estée Lauder, WPP’s projections for like-for-like revenue in the upcoming year fell short of analyst expectations, with an anticipated decline of “mid- to high single-digit” percentages in the first half. However, the company mentions a potential for an “improving trajectory” in the latter half of the year.

After multiple profit warnings, WPP exited the FTSE 100 index in December after a nearly 30-year presence, surrendering its title as the world’s largest advertising group by revenue to French competitor Publicis Groupe in 2024.

The company’s valuation has drastically declined from £25 billion just nine years prior, with its share prices plummeting over two-thirds in the last year to under £3 billion. Following the announcement, WPP’s stock fell more than 6% on Thursday.

Meanwhile, U.S. competitor Omnicom, which recently completed a $13 billion (£9.6 billion) acquisition of Interpublic, raised its annual cost savings target to $1.5 billion. This announcement, highlighting a $1 billion reduction in “labor costs” targeted by 2028, has delighted investors and resulted in a 15% rise in its share price.

Recent statistics also reveal that UK advertising agencies experienced their highest annual staff turnover last year, primarily affecting younger employees. It suggests that AI tools are jeopardizing jobs, pressuring the industry to reduce workforce costs and restructure operations accordingly.