WPP PLC on Tuesday announced a cost-cutting plan and set out an artificial intelligence strategy, earmarking an annual cash investment of around £250 million in proprietary technology.

WPP shares rose 2.8% to 802.80 pence each on Tuesday morning in London.

The London-based advertising and corporate communications firm said it aimed to delivery growth and structural savings as a result of the creation of VML and Burson, and simplification of its media investment unit Group M.

Last week Thursday, WPP had announced it will merge its two communication agencies BCW and Hill & Knowlton to create Burson, a communications agency focused on building and protecting reputation, which it plans to become operational from July.

The company on Tuesday said it aims to ‘maximise the potential of creative transformation and deliver faster growth, higher margins and improved cash generation’.

Chief Executive Officer Mark Read said: ‘AI is transforming our industry and we see it as an opportunity not a threat. We firmly believe that AI will enhance, not replace, human creativity. We are already empowering our people with AI-based tools to augment their skills, produce work more efficiently and improve media performance, all of which will increase the effectiveness of our work. We also see opportunities to sell new AI-driven products and services to our clients and to capture more growth in areas like production.’

The company also announced cost cuts. WPP said it expects annualised net cost savings of around £125 million in 2025, with 40% to 50% of that saving anticipated to be achieved in 2024.

Further, it targets £175 million in gross savings from efficiency opportunities across back office and commercial delivery.

Finally, WPP said for 2023, it expects 3% like-for-like growth in revenue minus pass-through costs, and a headline operating profit margin between 16% to 17%.

This is an upgrade from its October guidance for 2023. Back then, it had expected growth of 0.5% to 1.0% in like-for-like revenue minus pass-through costs, and a headline operating margin of 14.8% to 15.0%.

For 2024, it expects like-for-like revenue less pass-through costs growth between 0% and 1%, and a headline operating profit margin improvement of 20 to 40 basis points, excluding foreign exchange impacts.

WPP added: ‘Our plans include annual cash investment of around £250 million in proprietary technology to support our AI and data strategy.’

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