Philip Lader

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Philip Lader

• Chairman

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Sir Martin Sorrell

• CEO, WPP

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Strategic Priorities

• Short term to capitalise on the 2004 to 2006
  up-turn
• Medium term to continue to successfully
  integrate acquired companies
• Long term to continue to develop our businesses
  in the faster-growing geographic areas of Asia
  Pacific, Latin America, Africa and the Middle
  East and Central and Eastern Europe
• to continue to develop our business in the
  faster-growing functional areas of marketing
  services, particularly direct, internet,
  interactive and market research

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Key Priorities, Objectives and Strategy

• Faster growing markets to be one third of total
  group
• Marketing services to be two thirds of total
  group
• Quantitative disciplines to be one half of total
  group

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Strategy, Structure and Competitive Position
Faster Growing Markets To Be One Third of Total
Group
WPP Today incl. associates1
WPPTomorrow
WPPToday1
Faster GrowingMarkets2
Faster GrowingMarkets2
Faster GrowingMarkets2
NorthAmerica
NorthAmerica
NorthAmerica
24
29
34
33
34
39
37
37
33
Europe
Europe
Europe
¹ Based on full year 2006 revenue ² Asia Pacific,
Latin America, Africa Middle East, Central and
Eastern Europe
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Strategy, Structure and Competitive Position

• Brazil, Russia, India and Greater China (BRICs)
  account for approximately 10 of WPP revenue
  today
• According to Goldman Sachs research, Dreaming
  with BRICs, these countries will grow at 10.4
  CAGR through 2015
• According to Zenith, ad spending as a of GDP
  for BRIC was 0.5 in 2001 compared to mature
  markets where it is 1.5 to 2
• If GDP grows in line with Goldman Sachs
  estimates, and advertising spending as a
  proportion of GDP equals that of mature markets,
  BRICs alone would represent approximately 25 of
  WPP revenue by 2015

Wilson, Dominic and Purushothaman, Roopa. 1
October 2003. Dreaming with BRICs The Path
to 2050. Goldman Sachs Global Economics Paper
No 99 page 9
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Strategy, Structure and Competitive Position
Today
2015
Faster GrowingMarkets2
Faster GrowingMarkets2
NorthAmerica
NorthAmerica
15
Europe
39
24
Europe1
14
8
BRIC
BRIC
UK
UK
1 Europe excludes Central and Eastern Europe
² Asia Pacific, Latin America, Africa Middle
East, Central and Eastern Europe
Assumes Brazil, Russia, India and China GDP
growth of 10.4 CAGR according to Goldman Sachs
Research and Advertising spend as of GDP equals
that of mature markets through 2015. Illustrative
purposes only intended to isolate the effect of
BRIC GDP growing faster than rest of world
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Strategic Priorities
Marketing Services To Be Two Thirds of Total Group
Tomorrow
Today including associates1
Today1
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48
48
52
52
67
Advertising Media Investment Management
Marketing Services
¹ Based on full year 2006 revenue
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Strategic Priorities
Quantitative Disciplines To Be One Half of Total
Group
Tomorrow
Today including associates1
Today1
Information, Insight Consultancy and Direct,
Internet Interactive
Advertising, Media Investment Management Other
Marketing Services
¹ Based on full year 2006 revenue
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Strategic Objectives
We continue to focus on our key objectives

• Improving operating margins
• Increasing flexibility in cost base
• Using free cash flow to enhance share owner
  value, and improve return on capital employed
• Developing role of parent company
• Emphasising revenue growth more as margins
  improve
• Further improving creative capabilities and
  reputation of all our businesses

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Historic Headline PBIT¹ and Margins
PBIT1 m
PBIT1 margin
Long-term target 19
20
1000
14.5
14.0
16
859
800
14.1
14.0
13.0
Objectives
12.0
14.5
755
13.0
12
600
16.0
2009
561
560
534
15.5
2008
468
8
400
433
15.0
2007
4
200
0
0
2000
2001
2002
2003
2004
2005
2006
PBIT
Margin - Full Year IFRS
Margin - Full Year 2004 UK GAAP
Headline PBIT excludes finance income/ costs,
taxation, goodwill and intangibles charges,
investment gains, and share of exceptional gains
of associates. For 2004 onwards, Headline PBIT
has been prepared under IFRS. 2003 and prior
periods are in accordance with previous UK GAAP.
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Financial Model

• Organic revenue growth 0-5
• Margin growth in line with objectives
• Operating profit growth of 5-10
• Incremental revenue and profit growth from
  acquisitions of up to 5
• Overall growth in EPS of 10-15

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Earnings and EPS¹
Earnings (m)
42.0p
17
500
36.0p
29
32.3p
400
30.9p
27.9p
29.0p
23.8p
300
200
100
0
2001
2002
2003
2004
2005
2006
2004 UK GAAP
IFRS
¹ Diluted Headline Earnings and Diluted Headline
EPS
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Increasing Flexibility in the Cost Base

• We continue to focus on a more flexible cost
  structure in three key areas
• Staff c. 50 of revenue
• Property c. 7 of revenue
• Bought in services c. 30 of revenue
• Increased flexibility in all areas important to
  combat any future economic slowdown

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Increasing Flexibility in the Cost Base
Change In Variable Costs
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2001
2005
2006
12
10
8

8.2
12.8
13.0
6
4
4.6
7.6
7.7
2
0
Variable Staff costs as of Staff costs
Variable Staff costs as of Revenue
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Using Free Cash Flow to Enhance Share Owner Value
- Acquisitions

• Tender offer for 24/7 Real Media
• Continued focus on small and mid-size strategic
  acquisitions a number completed during first
  five months
• Major focus continues to be on information,
  insight consultancy and faster growing sectors
  within branding identity, healthcare and
  specialist communications and faster growing
  geographies
• Acquisitions in advertising used to address
  specific client or local agency needs
• Continue to find opportunities, particularly
  outside the US

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Using Free Cash Flow to Enhance Share Owner Value
- Dividends and Share Purchases
Share Repurchases

• 2006 dividend raised by 20 to 11.21p per share
• Distributions to share owners

of Share Base
Dividends per share
Annual increase
Amount
Dividends
The Company increased the target for the rolling
share buy-backs from 2-3 of its share base,
equivalent to 200-300m to 4-5 or 400-500m in
2007 and 2008 in the open market when market
conditions are appropriate 1 23.256million shares
purchased to date at a cost of 175.4m (average
of 7.54 per share)
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Emphasise Revenue Growth More as Margins Improve

• Continue to focus on delivering above-average
  revenue growth by
• Expanding networks to take advantage of faster
  growing geographical markets
• Re-enforcing competitive advantage in segments
  where growth is expected to remain higher, eg,
  Market Research, Direct, Internet, Interactive,
  Technologies, Retail, Healthcare, etc.
• Taking advantage of consolidation trends to gain
  market share

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Improving the creative capability and reputation
of all our businesses

• By placing greater emphasis on recruitment
• By recognizing creative success tangibly and
  intangibly
• By acquiring highly regarded creative businesses
• By placing greater emphasis on awards

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WPP Today
Revenue 5.9bn PBIT 859m
Information, Insight Consultancy
Public Relations Public Affairs
Branding Identity, Healthcare
and Specialist Communications
Media Investment Management
Advertising
Revenue Wide 2.3bn Narrow 1.03bn
Revenue 2.8bn PBIT 443m
Revenue 893m PBIT 99m
Revenue 596m PBIT 90m
Revenue 1.6bn PBIT 227m
Revenue and PBIT figures are 2006 reported
sterling actuals PBIT is stated before goodwill
and impairment, fixed asset gains and investment
write-downs
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WPP Opportunities

• Geographic
• Technological

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WPP Today
Media Investment Management GroupM
Irwin Gotlieb CEO
KR Media (25)
MindShare
MAXUS
Mediaedgecia
MediaCom
Charles CourtierCEO
Dominic ProctorCEO
Nick Daly COO
Bruno KemounEryck RebbouhJoint CEOs
Alex Schmidt-VogelCEO
Kinetic
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Irwin Gotlieb CEO, GroupM

• 2003 appointed Global CEO, GroupM, world's
  leading full service media investment management
  company
• Launched MindShare North America, consolidating
  media resources of JWT/Ogilvy, to create global
  entity
• Joined WPP 1999 as Chairman/CEO MindShare
  Worldwide
• Prior to WPP, founder and President/CEO of
  MediaVest Worldwide, part ofMacManus Group
• 22 years in Broadcast Programming with DMBB,
  ultimately Worldwide Director of Broadcast
  Programming
• Multiple media recognitions eg Media Player of
  the Year by AdAge in 2000, inducted into
  Broadcast Cable Hall of Fame
• Member of Board and Executive Council of the Ad
  Council and member of 4As CEO Committee

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Rob NormanCEO GroupM Interaction Worldwide

• Member of GroupM Global Executive Committee
• Prior to GroupM, founded and led digital media
  arm of Tempus Group (acquired by WPP in 2001)
• Responsible for digital practices of MAXUS,
  MediaCom, Mediaedgecia, MindShare
• Largest buyer of online media in world
• GroupM among top 3 largest agency clients of
  Google, MSN and Yahoo!
• 1,300 people worldwide

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Irwin Gotlieb

• CEO, GroupM

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The Leading Global Media Investment Management
Operation

• GroupM is the parent company to WPP media
  agencies
• MAXUS, MediaCom, Mediaedgecia, MindShare
• Represents over 31 of the worldwide media market
  (RECMA)
• The intelligent application of physical and
  intellectual scale to benefit our clients and our
  companies

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GroupM Market Strength
Rank 1 60.5bn 31
Rank 1 26.0 bn 32.2
Rank 1 27.0 bn 29.1
Rank 1 6.3 bn 22.9
Rank 11.2bn 25.2
Source RECMA
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Vitality

• GroupM ranked number 1 in Vitality and Momentum
  by RECMA for 2006
• GroupM agencies won 3 out of 4 Agency of the
  Year awards in the US
• Mediaedgecia - Global Agency of the Year - Ad
  Age
• Mediaedgecia - Global Agency of the Year -
  Adweek
• MindShare - Agency of the Year - Adweek

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Role of GroupM

• Maximize the performance of our media
  communications agencies
• Ensure that each of our agencies is smarter and
  stronger in the service of its clients
• Operate as parent and collaborator in performance
  enhancing areas
• Develop synergies and leadership among the
  agencies in trading, content creation, sports,
  digital, finance, proprietary tools
• Diversify our business to meet the future needs
  of the changing marketplace
• Help our agencies create the most stimulating and
  rewarding work environment for our people
• Increase WPPs market share in this sector

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The Evolution of Media

• Communications Planning
• Exploiting opportunities in Digital

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What is Communication Planning?

• The effective allocation of marketing investments
  across all channels to meet a clients business
  objective
• Uses a combination of rigour and imagination to
  deliver a holistic platform and architecture for
  a brand or corporate marketing spend
• It defines how a brand will communicate with
  consumers

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A New IP and Data Centric Context

• Communications strategists will be the key
  advisors for clients within the GroupM agencies
• They will marshall and package the full range of
  GroupM services Business Science,
  Entertainment, Sports, and Cause to navigate the
  complexities of modern media world

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Rob Norman

• CEO,GroupM Interaction Worldwide

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Marketings Perfect Storm
Massproduction
Massmedia
Bigretail
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The Consumer Strikes Back
Personalization and speed
Fragmentation and interaction
Multi-channel distribution and conflict
A new world order
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Shelf space
Census
Intention
Behavior
Community as publisher
Hive
Arbitrageurs
Integrators
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A New Kind of Integration for Success
Context
Content
DATA CENTER
Currency
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Our Mission Remains Unchanged
Increase the efficiency of changing minds
Reduce the costs of selling goods
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We Were
The worlds largest vertically and regionally
integrated commercial message distribution
business
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We Have Become
The worlds largest vertically and regionally
integrated commercial message distribution
business
A major data management center A major producer
and distributor of branded and entertainment
content across all analog and digital channels A
significant component of the distribution chain
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Complexity Increases Demand
GroupM
Across WPP
More channels More optimization More
transactions More flexible value chain More
distribution opportunities
More channels More messages More formats
to develop More content required More
research
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Our Challenge
To continue to leverage our physical and
intellectual scale to consolidate opportunity in
fragmented markets
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WPP Today
SocialMedia
Long Tail and Targeted Advertising
Mobile
Online Video
In-Game Advertising
Interactive Agencies
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Mark ReadDirector of Strategy, WPPCEO, WPP
Digital

• First worked at WPP parent company and then at
  Ogilvy and Hill Knowlton (1989 1994)
• Founder of WebRewards in UK
• Principal at Booz-Allen Hamilton
• Rejoined WPP in 2002 as Director of Strategy and
  CEO WPP Digital
• Joined WPP Board in 2005

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Mark Read

• Director of Strategy, WPPCEO, WPP Digital

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Role of WPP Digital to act as a catalyst for the
Group to take advantage of the digital opportunity

• Develop a leadership position on the digital
  opportunity for our people, clients and the
  industry
• Identify and make acquisitions, strategic
  partnership and investments in the digital area
• Develop and coordinate group-wide technology
  investments
• Explore and fund new businesses within WPP

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Our Digital Revenues
USm
Digital Revenues (USm) Pre-24/7 Real Media
2317m
2500
2000
1746m
1500
974m
32
1000
693m
500
41
0
2005
2006
2005
2006
Narrow or Pure DigitalRevenues
Broad Definition
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SocialMedia
Long Tail and Targeted Advertising
Mobile
Online Video
In-Game Advertising
Interactive Agencies
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• In-video advertising, focusing on social networks

• Targetted TV advertising

• Search and blog reputation management

• In-game advertising

• Social networks

• Online advertising agency for local businesses

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• In-video advertising, focusing on social networks

• Targetted TV advertising

• Search and blog reputation management

• In-game advertising

• Social networks

• Online advertising agency for local businesses

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• Leading global digital marketing company, founded
  in 1995. In 2006
• 200 million revenue (43 organic revenue growth)
• 19.6 million EBITDA1 (101 growth) before stock
  compensation
• 400 employees across 20 offices in 12 countries
  with 61 outside US
• Three core businesses
• Search Solutions Provides Search Engine
  Management to clients, managing more than 200
  million in search billings on Google, Yahoo, MSN
• Media Solutions Offers a media network with
  inventory drawn from over 950 sites reaching more
  than 115 million unique visitors each month
• Technology Solutions Manages, optimises and
  delivers online advertising for more than 400 web
  publishers powering more than 1,000 websites
• Comprehensive search JV with Dentsu in Asia

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