WPP plc (WPP) Earnings Call Transcript & Summary

My name is Thomas Singlehurst, I head the Investor Relations for WPP. And welcome to Devon's Point. Thank you very much for making [ Chipotlane ], London. I hope by the end of the afternoon, you'll be -- you'll agree that it was very much worth the journey. I'm going to be joined this afternoon by Richard Glasson, Global CEO of WPP Production; and Laurel Wooten, Global CFO of WPP Production. A number of you would have met Richard at our event in [ Cannes ] in June. Now before I hand over to Richard for some introductory remarks, I wanted to make a handful of points just to sort of kick off the session. The first is to put it in context. When we laid out Elevate28 in February, we set four objectives as part of that strategy. The first is to drive superior growth to clients and become a simpler, more integrated company to leverage WPP Open for competitive advantage and create financial foundation for the future. And under these those priorities sit the building blocks we're investing behind. And to recap on those, the first was lead with media and data at the half of an integrated offering established next-generation creative and production capability. And then thirdly, Elevate Enterprise Solutions to partner on AI transformation. And the significant of that is it maps onto the investor event to be planned and are delivering through the course of the year. So we took you through WPP Media. In June, we used the session in [ Cannes ] to double-click a bit on could be creative. We will be talking about in price solutions later in the year, most likely in early December, but today is an opportunity to really have a look at what's happening under the WPP production. In keeping with those earlier sessions, though, the aim for today is really to bring to life what we're trying to achieve is not a financial presentation. We're not going to be talking about financial performance or the immediate outlook. And please take that in mind when we do the Q&A. There are some safe harbor statements, if you want them, I've got a copy. So I'm very happy to share if you're interested. But it's going to be largely an introduction to really how this business works on what we're doing in the particular facility. With that, parties that, and I'm going to hand it over to Richard. Thank you very much.

Thanks, Tom. So welcome to Devon's Point. We're delighted that you sign out of your busy schedule to come here and see. This some tells me that following media and associated industry doesn't always get you the best deal slips, but hopefully, this will be an interesting afternoon, and you're going to see really what it is that we do here. And I guess a couple of key messages that we wanted to get across is, I guess, counterintuitively and ironically in a time when everyone is wondering about what AI does to the world of production and to the world within production, what we're in here is the physical embodiment of really what the impact is for us, which is investing in new infrastructure, investing in new technology and crucially investing in new talent and new people, a number of whom you'll meet today. And so I think -- and we're obviously delighted that this is investing in this part of London. And we have very good noises in the government about the message it says about being able to invest in the creative economy in the U.K., particularly we would say very much now by AI, which will come to life. And so when we do the show round after this panel discussion, we'll take you for a few different demos. You'll see that each one has a purpose. Each one is designed to bring to life a different technology as a in way of working a different idea. And so that's why we're holding the Q&A back because hopefully, it'll start on interest in thoughts. But more widely, the question is why build this at this time? And the answer is because we believe that the fundamentals of our part of the industry, the production of the industry are changing dramatically and very dynamically at the moment, powered by technology, powered by different ways of working, we believe that, that is an extremely positive direction of travel for us as a business because of our ability to invest at scale because of our ability to lead the disruption of the market and the opportunity that, that gives for us to capture a larger share of wallet of our clients, which should continue to fuel our growth. And then I guess, finally, [ Charlotte ], I'm sure say this when you met her later, what you're going to see today is the starting point on this journey. So today, you'll see some real traditional shooting using high graft you'll see some absolutely cutting edge only available 3 weeks ago, AI. You'll see virtual production, which has been used in TV and movie industry for quite a long time, but have struggled to break through in the advertising arena for reasons we can discuss. But I think now is its moment. And so -- but also what there is here, which you will see a bit less of is we have true end-to-end capabilities. We have VFX pipelines. We have CG teams. We have color grading, editing, animating, so it's a real making environment. And I think that, again, it's almost going back to the future. We believe that this as a facility that WPP reduction built but we built it at the whole of WPP because we believe that it's that point of making around which the integration that all of our clients are demanding really coalesce. So we'll have people in WPP creative working here, bringing their clients here, seeing the work comes like in real time. We already have people from media spending a lot of time here because understanding how we're adapting work for specific audiences. We've got -- you'll see the #7 example in there where we can shoot in the morning, and we can be distributing to social media in the afternoon. It's a very different patents of working, and we think that's where the industry is going. So we're very excited about what this facility represents the first of a number that we're looking to build around the world. But I think just as important is the message it sends about where the industry is going and what our role in the industry is. So we'll questions later. I think we're going to move into a panel session now. and there'll be plenty of time for show around. And we really hope you enjoy your afternoon. And once again, thank you for coming. And do you want to join us on stage all.

Thank you, on Well, listen, thank you very much, Richard, and thank you, Laurel. I think -- I mean, hopefully, 1 agree. I think production is one of the least well understood part of the WPP portfolio. And obviously, we're going to talk a lot about what's being built here and how the landscape industry is changing. But maybe just to sort of set the scene and start at the beginning, Richard, take us back, sort of how Hogarth came into being, what it grew into? And then fundamentally, why WPP reduction is generally a new thing rather than Hogarth in a pink rock.

So also is a precursor organization WPP production. It's a company that I joined 16 years ago. And I think it's a relatively little known story. I mean the first story behind it was Martin who is CEO of WPP at the time, failed to by tag and cast around the market and find an alternative and there wasn't really one of an strange company with the time, 14 people in it called Hogarth. I joined about that time, about 6 months later, when WPP just invested about 30% of the business. And at that time, we were 50 people in one office in London. And I think we have a very unusual story in this industry and that we grew entirely organically, we've never made an acquisition. To -- at the end of 2025, we have about 7,500 people. We're growing strongly organically throughout that time period. And that was the point at which we took the decision -- in took the decisions [indiscernible] 28 to launch WPP production. And the reason for that was, although we were, at that time, the largest production organization in the world, certainly where most of the production activity places consolidated way within WPP. We only address a relatively small part of WPP's total production spend because a lot of that production spend went through traditional agency models. So Hogarth traditionally a direct to client business. So we had a surprisingly small overlap between our business and WPP's major clients or larger clients globally remains Apple. And Apple is largely an Omnicom client from a media and a greater point of view. But we're actually the largest marketing services partner because production is weather activity is. So we were traditionally a direct client business. And then now that we've -- now that we've become WPP production and what that tail is transferring about. In [ lend off ], it so talks about 1,000 people that end up being about 1,500 people from other parts primarily from WPP creative as well as a few sort of specialty studio operations. They'll come into WPP production. What that means is now we really do manage all of the production on behalf clients. And previously, where they might have found WPP resale hard to navigate, particularly from a production point of view now, there's one [indiscernible] production, that us. And we're already seeing a very significant pivot, which is -- if you'd asked me a couple of years ago, then probably 80% of our new business activity, which has a loan direct to client, now 80% of our new business activity is with other parts of WPP as part of an integrated solution.

Perfect. And I mean I mentioned earlier on, we had the client last night. But for our clients, what does operating as one business really change? And then how -- to build on that, how does it -- how we do it change internally?

Yes. I mean -- so quite a lot of changes. I mean I think the first point, I guess, is coming back to that simplicity of navigation. But actually, I think clients are now coming to WPP asking for a truly integrated end-to-end way of working because in the past, it was a pretty linear process. And it was a long process. And so there would be -- and a lot of the communication activity, the advertising activity was driven by campaigns. But now we've moved to a world where work is always on. So you have a creative agency is thinking about the strategy, the planning, the ideation and the overall brand platform. That comes to that work that has to be made, but not made once as a set of matching luggage and distributed. But actually, that becomes the basis for always on activity. Producing work daily through social, producing work that comments. Obviously, that integrates with solutions from a MarTech point of view -- a MarTech content point of view, integrate of media what goes through. So all of a sudden, production in the past was at this ugly label, which was -- it was referred to as nonworking media, which effectively meant that bit of the media budget that you have to spend in order to have something to put into media. And everyone thought media is the working spend and production is sort of necessarily evil almost. And I think now what we're seeing is that production has become very much an engine performance because now if we understand what the underlying strategy is and we know that the biggest challenge we [indiscernible] the sheer volume of content they need to produce it, the right message to the right audience in a culturally relevant way in the right channel at the right time, constantly every hour of every day and responding trends and all the rest, we conclude a couple of things we can [indiscernible]. One is, when you think about addressable need, you've on about 85% or 90% of all the media that WPP Media will buying half their clients is addressable now. We know that somewhere between 55% to 60% of the effectiveness of that media is driven by the quality of the creative content that goes through that, which is our responsibility. And we also know through work examples of clients, but where we do put an effective content through those media channels, clients need to invest less in need. So it delivers real value back to them. So clients announce it. And so that gives us the opportunity as a business of WPP production to access new budgets to access new ways of working. But for clients, it's real to monster all measurable value. And that's where I see so suddenly production has gone from being a procurement conversations for marketing conversation and one which is less focused on cost effectiveness and efficiency alone, although those are still bought in hygiene factors, to one which is much more about the quality and relevance and engagement of the work and how that drives responses with the consumers.

Perfect. Laurel, let me bring you in. Obviously, WPP production was sort of announced as a concept back in January, and we launched the [indiscernible] Elevate28 plan in February, your CFO of the business, and you've been in charge of bringing all of that together. Can you maybe just paper of what production looks like?

Yes, of course. So we are the largest content production company in the world. It's about 100,000 people all around the world, servicing both WPP clients which gives us a very unique advantage as well as direct production-only clients. Our delivery model is all about right sourcing the work. So we use onshore, nearshore and offshore to deliver keeping content solutions and client facing sort of high craft content cost and then project management education expansion gets delivered all around the world, but primarily concentrated in our large delivery centers, which are in cost optimize locations. We're growing, which is good. relatively unique, we grew in the first half, relatively unique position within WPP. But I think importantly, our growth story is not actually a market growth story. The production market is estimated around, I think, GBP 57 billion, and it's not really expected to grow materially in the near term. So our growth opportunity is really coming from two places. Each year, WPP through kind of more traditional production models sends somewhere between GBP 1 billion and GBP 2 billion of spend out to third-party production companies. And so the opportunity we have at hand is by reinventing the way we originate work, recapturing more of the spend that's actually already been [ diminished ] by us. And then the second opportunity for us is in these types of productions that are growing more quickly in the market, doing sort of a mix shift for us, making sure we index we're heavily into those.

Perfect. And we'll come back and talk about high-velocity production in some of those areas in a second. When we did the session in Canada, I say that [indiscernible] suppose was created, but Richard did take part of it and talk about and what we're planning with production. I think keep me on it. But I think my interpretation of the view in the room was that the strategy makes sense. The area that people need a bit of help with understanding mechanics. Quite simply, how does the math work, how Julien sort of picked up. But. Richard, maybe you can help us a -- when we say we're going to in-source work that partly goes outside the GBP 1 billion to GBP 2 billion that Laurel is mentioned, what do we actually mean? How do we think about that?

So -- and anyone that's looked at the trade press about us in recent weeks, we have seen that there was some interest in this whole area to say lease. So let me -- so when we're talking about in-sourcing, which is obviously -- so it's effectively addressing that GBP 1 billion-plus third-party spend that WPP agencies have. I think the selling point is not. What is not is just asking an activity, which is currently done by a third party and doing that same activity using our own people. Because that whilst it would attract work to WPP isn't what our clients want, and it's not what they're after. So what it is, is looking at what outcomes to clients want in terms of the type of work, the volume of work and working with those clients to transform how that work is made. And again, that's a lot of what you'll see today. So of that very large number, a lot of that money is spent on air travel. It is spent on production locations. It spends on buying crews, cars, equipment around the world and having to do that multiple times in multiple places to get localized content. Our argument is you don't need to do it use amount of that activity. And then if you overlay on that, what some of the unlocks, so that's, if you like, the primary production, the making part of it. And then there's also a lot of spend in traditional post production and finishing editing and all the rest of it. And traditional post production is being -- is going through a huge amount of upheaval. AI is having a big impact on that, different workflow are having an impact on that. But also client demand having an impact on that because if in the past, you had 2 or 3 months of planning for a location shoe, you had a location shoot, and then you pay me to 3 months of post. You're 6 months into a campaign before you put a single asset into the market, and that just doesn't work in today's world. And so there will always be those types of moments. There will always be verbally, the Super Bowl moment or the Christmas out or whatever it is where you do have the time to plan and the time to do that. And that traditional part of the market will remain. But a majority of the client activity, old Ideas majority of client activity. They want to use virtual production, and they want to use always on shooting, they want to use different models. And clients are very willing to consolidate a single source. If we can demonstrate value if we can demonstrate speed. And so we have very, very open conversations with our clients about the best way -- the best model of making work. And typically, that will be a mixed model will be a model where there will be certain amount of working with the outside market for specialist capabilities. There will be some form of timing production in a facility similar to this. And there will be some form of offshore, automated more commoditized end of their work. And the simple value proposition for clients at the moment, if you think the -- obviously, the dominance of the platforms in terms of where work is ending up and then you look at the changes to algorithms in those platforms, those algorithms are minding net new content, just funding the same version food, it gets down rated by the algorithm. And so you're not getting an effective use of your media spend. So what clients are doing is they're saying, how do we win maximum efficiency to that adaptation part of the business where we can automate, we can use eugenic workflows, we can take time or cost out of it, not in order to put back on their boom line, but to reinvest in content origination because they need a constant supply of net new content, created in an always-on environment. And again, that's a lot of what you'll see as you walk around there. So it's a very strong value proposition for the vans, which globally have a happy coincidence of being very good for the net sales performance of WPP production because we can build those facilities to be able to bring that work into our own organization.

This is a dangerous question to ask him in the audience, but maybe you can talk a little bit about what that means in terms of the actual economics of a job if you could sort of characterize it for us.

Yes. I mean if we look at it in 2 different ways, we've got -- because we were addressing the we're addressing these third-party spend. So at the moment, there's a huge amount that there's a party spend that Hogarth in the past and now WPP production doesn't touch. It goes into a creative agency, it goes out to the ports. . Now we manage that spend. So we look at what element of that spend is more appropriately addressed by us in conjunction with the client and condone the agency more appropriately addressed by us. And so that's just an increase in that's an increase in revenue and increase in net sales. It's been working that was previously going out. What we also have is those clients that are existing clients where we want to work in different ways with them. And the economics of that straightforward, which is previously -- and I won't go through specific numbers, but you can imagine previously, there was revenue that was cost of sale and there was net sales. And so that net sales number for -- so basically, the revenue will decrease, which means the client spend increases because we're producing work in a more efficient way, but our net sales increase is because we are doing more of that work ourselves, the spend. So it's -- again, without sounding glib, it's absolutely a win-win because the client gets much better value because they're not spending, I would argue wasting money on activities done in legacy ways that don't need to be done. And we are capturing more of that revenue because we're using our utilities noon capability to deliver that work. So whether it's net new or whether it's reposing existing, it's still an increase in net sales for us.

Perfect. And Laurel to sort of bring that back into your world. And I mean, obviously to going into forecast, that would be more dramatic, I think, with the audience than we want to do. But at the same time, how should we think about this sort of in terms of how it impacts the financial model? .

Yes, definitely. So there's really three sources of value. So you've got recapturing more of the spend, which is already managed by us. you have expanding actually what we sell to clients because we're originating working device through generative AI, virtual production, et cetera, VFX pipelines. And then the third point is really around the efficiency we bring to the model, right? So removing duplication identic orchestration, et cetera. So on the first point, it's kind of Richard to make the point that the third-party spend pool that we've been talking about is not a revenue target for us because actually, the whole point of us bringing it into a new model is to drive efficiencies for the client. So what does change that is the quality of what you keep provide. So less pass-through costs as described and more net revenue for us. On the second point, could we go back to what I was talking about, the mix shift. This is a part of the production market, which is growing rapidly, right, in a market that is in overall terms, not expected to really grow. So is that mix shift for us moving into these higher growth areas is a really critical component to our strategy in driving value in WPP. And then on the third, production consolidation is part of the GBP 500 million that has been -- that will be delivered through the Elevate28 strategies. And just kind of thinking about how that ladders up to the group. We said stabilized in '26, returned to gross '27 and accelerate in '28. And production is a key part of that stabilization of the WPP Elevate28 strategy in 2026. But we won't be guiding to any specific operating unit numbers today.

So apologize and [indiscernible], no upgrade. But no, on a serious note, I think one of the other topics that gets a lot of their time with this group with investors more broadly is AI. And I think the bare case if you can characterize it this way is that, AI just deflates everything and therefore, any sort of aspect of marketing services and therefore, commoditized and challenged yet. We've just spent a lot of money building the facility, a nice effect you have a different view. So maybe Richard, you could take that sort of head on. Why is AI the reason you built this rather than the reason you shouldn't have built it?

Well, I think everyone can have an opinion on the effect AI in [indiscernible] society, what our [indiscernible] is and what our sense of where AI is going on a broader level. What I would say bring you back to our world of production. Even in the I've been in the production industry, but going back far further. It's an environment in which the technology changes incredibly rapidly and incredibly profound whether that is shifting film to digital, whether that is thinking about all of the tools of automation Damian, whether that's thinking about now the advent generative AI, right? But I think the sort of misconception that a number of people would have is that we're making a decision about where the work is produced using AI or produce using a traditional method, whereas the reality is, there really isn't a single piece work we deliver today that doesn't have some element of AI read through it. Now that might be because we're using that AI for pre-visualization on store reporting. It might be because we're using agentic workflows. It might be because we're using AI to inform data patterns to produce or what channel or it may be that we're using generative AI for some element of the work. So what you see behind you is a physical car and when we do the demo, you'll see a physical actor and you'll see in the active interact [indiscernible], but when the backlog comes up the industry at , that's fully AI. But when you see it, you wouldn't know that was AI or car, but that was AI because it's just -- it's an urban backdrop. But obviously, for a personalization point of view, and you'll see it in the kitchen says, well, if we want that to be Tokyo, we want that to be Germany or we want that to be Switzerland. We can do that using the same car, using the same talent, using the same [indiscernible], using on the same day. So it sort of fundamentally changes the economics. But -- and then you'll see in the gray box technology, which I promise you will blow your mind that's when everyone gets a bit scared about, can I ever believe what I see on Sweden? And is anything that we're going to be real again. But we've got clients who are very focused on brand differentiation. The biggest challenge for the type of clients that WPP as an organization is how they differentiate the sales in the market. And we know their super high-quality content, supply quality work and the human element of that work is what creates that differentiation. Mediocrity has never been easier to achieve, anyone can afford mediocrity at the moment because you can run things through tools, the average things out and level things down. And so -- and that won't allow you to drive that brand differentiation. And so we are -- and again, you'll see we are not just investing in this infrastructure. We are -- we run a creative preship program. We are putting hundreds of people through that over the course of the next couple of years. developing brand new talent into this area because that AI for us is actually managing of growth and is enabling us to attract more work and attract better talent to deliver that work. And I don't think we are moving any time soon to a world where you are looking at a fully AI start to finish out. I think it is another tool, another instrument that we can use to drive elevated outcomes, better differentiation, better cost, all of those things. But from our point of view, again, you'll see how we use it. It's -- we use a combination of traditional craft, traditional ways of working, AI, virtual production, VFX pipeline, CG. I mean not care too much about whether the product you're looking at CG or photography in the past. And I think we're -- so -- but some brands did -- so some brands we'd only use to talk particularly luxury brands. And so we just -- we'll move in a mixed market where there will be the right answer for different clients and different circumstances. And AI will form part of that response. Really all of that response but also really none of that response -- that makes sense.

Makes a lot of sense. One of the areas I suspect is probably a little bit more AI infused. We talked about it before is high-loss production. And Laurel mentioned that it's a part of the market that's growing at a very, very strong rate. Maybe Richard, you could help us understand high velocity specifically. What is it? Why does that matter? And I suppose critically, why does it need to sit right now to media?

And I think -- so historically, our greatest partnerships were with the creative agencies. And that was for a simple reason, which is content budget tended to be managed by the same people who looked after the creative origination budgets. And so we were paid out that content budget. Moving forward, that will remain an interesting partnership, right? Some you mentioned [ Enterprise Solutions ] earlier as well. I think the two huge growth areas for us are parts with [indiscernible] Solutions, where they are obviously putting MarTech systems into clients and those MarTech systems are incredibly content hungry. And so we have a very strong partnership in order to make sure that primarily our marketing operations unit base can supply all of that commerce performance media type activity. And so as [ Enterprise Solutions ] installs -- as I said, this content of market systems, that's a big source of growth. And the other one that has been, I would say, under penetrated up to this point. underutilized at this point is the relationship with media because now as I said 8% to 9% media [indiscernible] addressable, that addressable media needs variable content to go through that because that drives the greatest outcomes, and that has historically been, I think, a weakness in the industry as a whole because there hasn't been that connectivity. What I lost content is doing can effectively think of it as our partnership with media, which is we're taking those data signals and those media buys from WPP Media, and we are in real time as a self-leasing machine, producing content that we know will perform in those channels to those audiences. So using Open Intelligence, there's a single data layer that connects us and WPP media. Instead of clients briefing us on individual assets or groups of assets, we're now saying we can use predictive analytics to understand what combination of messages will work for what audience and what channel at what time, and we're producing that work and deploying that. And obviously, from a client point of view, the most important thing is in validating, but that is driving greater media efficiency greater cost effectiveness and higher performance of the work. And that's -- so that's a high loss content is going and there are different estimates, but that part of the market is growing by 30%, 40%, 50%, and we're certainly seeing a part of that.

Perfect. Laurel, we're going to get up in a minute and we'll have a look around. I'm sure one of the questions we'll get from the team is about how much we've met in this facility. But maybe more conceptually, how do you think the market should think about the return on investment from a facility like this and doing everything into end as opposed to sort of more directors.

Yes. So as I say, is 34,000 square foot end-to-end production facility, which is relatively unique within our network right now. And it's our flagship, but it's not the whole plan. So it sits alongside our existing studio capability all around the world. The unique thing about the funding for Devon's is that it's not being funded from a separate investment part. It's being funded from the operating model. And so we build it once and all of our WPP and all the WPP [indiscernible] can access this facility, which is very different from the traditional model where we would have had investment funding spread more timely and assets -- production assets that are cross within legacy agency models. So this is a really key kind of component. So the return really comes from three places. One is being able to recapture more of the spend that we already manage. The second is giving access to a wide WPP network. And the third is just the sheer sort of extraction of these very logistical heavy cost within production budgets today, travel, et cetera, which we sort of removed from it. And the three of those together is what really allows for kind of investment for a facility like that.

Can I just build on that because I think there's an ancillary important point, which is -- so we made -- we obviously within WPP production as part of WPP and with the requirement to hit quarterly results and all the rest of we have targets that we need to hit, and we have good targets to hit and we have margin targets to hit. And so the shortcut to this would have been to use -- to buy a facility to buy a company, to buy an existing studio or post out or whatever it may have been, which would have been a lot easier on our P&L, if you like. We thought that was entirely the one thing to do because then you're buying your legacy asset, you're buying yesterday's way of working. And we were much more focused on how do we build something which we believe is genuinely fit for future, which genuinely addresses the evolving needs of our clients and isn't going to need a huge amount of either integration or frankly reengineering to make it fair for the future because the traditional studio post-production market, particularly post-production market. It's a very troubled market at the moment. But that's not what we're trying to compete with. As I say, we believe there are different ways of working to model, which is why we built on the ground up. And we see confident saying many things , but we're so confident about return will generate on this because we have -- this has gone through our P&L and we are confident about the return that we'll generate from it.

Last time before we get on your feet. And maybe for you, Richard, actually, as I mentioned, I mentioned a couple of times, we had 1 of was 300 plus clients in here yesterday. If you're going to just fill the message we were giving to them in one or two sentences, what would that be?

I think what we tried, and I think we're successful in showing them this is a physical embodiment that there is dramatic change going on in our part of the market and that we need to think about how production acts are coalescing force to bring together the creative relationship, they're making relationship with the media relationship into a single integrated hole. But I would say this is on production, take around that moment and making that's where the magic happens, and that's where we believe the most fundamental changes have to get our market.

Perfect. Richard, Laurel, thank you very, very much for that. I know you're going to have a lot of questions, but we are going to come back and do the questions that we're going to have as much time as you need to go through other things. Maybe I don't know if your hand is up. So maybe there's a much time just coming, but we'll start with you.

I have two questions. For all the capabilities inside how many clients are already booked or committed with these new capabilities? And is the demand coming from existing clients or new briefs. And secondly, could you walk me through how you show or coming out from this capability? Is it day rates, project fees? Or does it get bundled into the wider creative or media contracts? And are you starting to experiment with anything more outcome-based?

So let me start on that. So we this has been a few years in the conception. And so we started choosing to clients in a very small sale probably 5 or 6 years ago in existing space, and we realize that, that build up immediately. So then we took on a small studio environment, which fills up real quickly, so we took on a large two environment we built up very quickly. And so although we officially launched this yesterday, the main stage is only just become available. The other stage has been available some time and they've been fully utilized through that period. So we have a number of clients, some of the prices that you saw there for whom we shoot always on content on a daily basis and have been doing that for a number of years. We -- I guess we know who the next use of this main stages, and that's going to be probably 2 months of constituting and big WPP clients coming in. And it's no exaggeration to every client we brought here so far has been -- has found a use case that is trying to get themselves but in. We're very confident that this is going to be very fully utilized. Interestingly, we hope not completely fully utilized because I didn't see exportation and R&D is a key function here as well. And so we want to scale on developing our people and developing our technology, and so we'll try to avoid being 100% utilized so that we do leave time to that. In terms of the model, we've got various models. And so at one end of the extreme, if we're working sometimes we do to a BBB process as a third-party production company or with the creator and they want to use our facilities, they can effectively dry hire them all the way through to like full-up production rooms run by [indiscernible] structure on equipment. And that's -- and that will be a combination of the studio fee, the daily rates for the people working on it. the equipment rental fees, again, all the equipment you've seen, we own with the exception of this big volume, which we have on a revenue share deal, so we can put any CapEx into this big screen here. That's rented on a usage basis on when we have a revenue share model with the owner of it. And so it's kind of a traditional studio environment. The -- and then if you -- some of our clients, particularly the ones where we're operating, always-on models, we have some day rates that are -- that are basically all inclusive. And so we operate against that. So there will be many, many hybrid models. And the answer about are we moving to -- so output-based pricing has been a feature of us for a long time. So typically, our -- in any client engagement will have a combination of paying for FTEs and we'll have output-based pricing for the number of assets that we produce. The evolution of that commercial model is twofold. I think one is, increasingly, we're going to be charging for IP platforms, tokens, underlying systems, if you like. And as we move into high loss content as I referred to earlier, I asked about earlier, I think there's an increasing opportunity for us to have performance-based remuneration. I think that is the one that clients are, I guess, in theory, most in favor of in practice, most were about implementing. So I'm not sure we've been -- I think there are many factors that influence that, but certainly, output-based pricing is a big part of what we do.

Yes. Last year, the third-party cost ex media was GBP 831 million. Does of GBP 1 billion to GBP 2 billion that goes to outside content production. Does that go through that line? Or is there any other part of the P&L where that goes?

What was the line you were inquiring?

WPP disclosed part service costs and give us a breakdown between media and non-media. And I would think that the production spend to third party doesn't go through media, so I would think 100% goes through that line, but I just wanted to go...

Maybe I'll provide an overlay and then Laurel can jump in. The overlay is not all of that is production. So by definition, no is the answer. But -- so there is a significant opportunity beyond the third-party revenue that we direct I think is -- I think the gist of your question, is it?

It was more -- because you gave GBP 1 billion to GBP 2 billion, which is quite a wide range -- but if it goes through that line, then with that line being the GBP 1 billion to GBP 2 billion is kind of GBP 1.1 billion max.

We're not going to split it incrementally. And also it doesn't matter. The key point is the GBP 1 billion to GBP 2 billion incremental revenue or incremental spend that can become our net revenue.