Grey Worldwide eyes WPP cost cuts

Costs at the global advertiser Grey Worldwide are likely to be cut under new owner WPP, NZ general manager Pete Darroch believes.

But the local offices will be unlikely to suffer, he says.

"New Zealand will be way down the track with big decisions," said Darroch. "[Grey] has large regional costs in the bureaucracy ... It's those areas where [WPP chief executive Sir Martin Sorrell] will streamline stuff."

Sorrell is expected to capitalise on last week's £750 million ($2 billion) deal by raising profit margins and reducing its tax burden.

In New Zealand, the deal gives three advertising agencies - Singleton Ogilvy and Mather, Young & Rubicam and Grey - the same parent. Mediacom and Mediaedge will share the WPP stables.

However Darroch says "basically, it's business as usual".

Expectations of consolidation have also prompted global chairman Ed Meyer to reassure clients the company will remain the same.

He says the "real story" behind the takeover is that "Grey will remain Grey, our business units will remain as they are, I will remain as chairman and chief executive and our commitment to do great work for our clients will remain our focus".