WPP WPP PLC

By Nick Kostov and Suzanne Vranica 

WPP PLC executive Mark Read has emerged as the leading contender to take over as chief executive of the advertising giant, according to people familiar with the matter, following the departure of founder Martin Sorrell.

They cautioned that WPP hasn't finalized its decision.

Ad industry veteran Hamish McLennan, another top candidate, is no longer in the running, the people said. Mr. Read is a longtime WPP executive who was elevated to the role of co-chief operating officer in April after Mr. Sorrell left the company.

"No decision has been taken yet on the appointment of the new CEO and no announcement is expected imminently," a WPP spokesman said. "We are however making excellent progress with the selection process."

Mr. Read, 51 years old, would inherit a company struggling to boost growth as it faces stepped up pressure from clients and upheaval from the dominance of Facebook Inc. and Alphabet Inc.'s Google in digital advertising. Marketers are cutting back on the fees they pay agencies, hitting WPP and rival ad holding companies such as Omnicom Group Inc. and Public Groupe SA. Consulting firms, meanwhile, are increasingly encroaching on Madison Avenue's turf.

Mr. Sorrell spent decades building WPP into the world's biggest ad company by acquiring advertising agencies across the globe and allowing them to compete against each other to win clientele.

Word that WPP was considering outsiders as the new CEO stirred fears internally that the ad giant was facing a major shake-up, according to WPP executives. Mr. Read, by contrast, is expected to retrofit -- rather than discard -- WPP's business model for the digital age.

In April, Mr. Sorrell resigned as chief executive after The Wall Street Journal reported that the company's board was looking into an allegation of improper personal behavior and whether Mr. Sorrell had misused company assets. Mr. Sorrell rejected the allegation "unreservedly" at that time. He has also more broadly denied any wrongdoing.

The 73-year-old executive, who still owns 2% of WPP, didn't have a noncompete clause in his contract. That allowed him to create a rival ad firm that earlier this month outbid WPP in acquiring Netherlands-based digital agency MediaMonks.

WPP Chairman Roberto Quarta said the CEO search has been "challenging" for a public company in the U.K., where remuneration is typically lower than in the U.S. and it is tougher to attract top talent. WPP also reduced CEO compensation after it was repeatedly criticized by shareholders for handing Mr. Sorrell some of the ad industry's biggest payouts.

In June, Mr. Sorrell dismissed Mr. Read as a lone successor, saying he required the "complementary skills" of co-Chief Operating Officer Andrew Scott to manage the company.

"One on their own would not be sufficient, in my view," Mr. Sorrell said.

WPP reached out to several outside candidates, including Mr. McLennan and Tim Armstrong, who runs Verizon Communications Inc.'s Oath internet business, people familiar with the matter said. Mr. Armstrong declined to participate in the contest, according to a person familiar with the matter.

WPP's board heard presentations from CEO candidates last week, according to people familiar with the matter.

Among those making presentations was Mr. McLennan, a former WPP executive who once ran Young & Rubicam, one of WPP's ad agencies. Mr. McLennan also had stints at News Corp. and Australian broadcaster Ten Network Holdings.

Investors are counting on WPP's new chief executive to steady the ship that Mr. Sorrell built while also charting a new course. Clients such as Ford Motor Co., Unilever PLC and Procter & Gamble Co. have been cutting back on the fees they pay for ad services. Some have also been producing more marketing in-house to save money and give themselves greater creative control.

Investors expect WPP to cut costs by ending Mr. Sorrell's practice of allowing agencies to operate like independent fiefdoms, duplicating each others services as they competed against each other for the same contracts.

"When we talk with clients, they want us to work together, not to work apart," Mr. Read said in an interview in June. "We know broadly speaking the direction we want to take."

WPP, which has 200,000 employees, lowered growth expectations three times in 2017, and has set budgets for this year on the assumption of no growth in revenue and net sales. Its share price has dropped by 25% over the past 12 months.

"Our business is undergoing structural change, not structural decline, and we have to adapt," Mr. Read said in the interview.

Mr. Read joined WPP straight out of college, working on corporate development. He later worked at consulting firm Booz Allen & Hamilton before founding WebRewards, a startup specializing in online loyalty programs that was sold to Bertelsmann SE in 2001.

In 2015, Mr. Read was tapped to run Wunderman, one of WPP's biggest agencies. At the time, Wunderman was a hidebound agency focused on direct marketing that Mr. Read transformed by bringing new services to the firm. He opened an artificial intelligence division that helps marketers create chatbots, automated helpers that operate on messaging services and social networks. He also moved Wunderman into consulting, buying a Spain-based digital transformation business, and making Salmon, WPP's e-commerce specialist, part of the agency.

"He managed to change the culture of Wunderman around the globe" by bringing in new talent and digital assets, said one WPP executive.

Write to Nick Kostov at Nick.Kostov@wsj.com and Suzanne Vranica at suzanne.vranica@wsj.com

(END) Dow Jones Newswires

July 27, 2018 12:02 ET (16:02 GMT)

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