Three questions for Sir Martin Sorrell as WPP hits 25

The other day WPP boss Sir Martin Sorrell turned up at Finsbury PR boss Roland Rudd’s summer party (WPP owns Finsbury).

Sorrell, still wearing his top hat and tails (he’d come straight from Royal Ascot, some might say looking like the Joker in Batman) was persuaded by Rudd’s young son to bid £7250 in the charity auction for dinner in a private room at the River Cafe restaurant.

Although he is an assiduous networker (he met his new wife at the Davos global beanfeast for top politicos and business people) this seemed a bit un-Sorrell like. Throwing money around, even in a good cause, is not what Sir Martin is known for.

Of course he has bid big many times (some shareholders would say too often) in the course of WPP’s history, it’s 25 this year.

Back in 1989 WPP bid an eye-watering $864m for David Ogilvy’s Ogilvy & Mather and when the next recession struck had to sweet talk its bankers into supporting the company.

In 2000 he tried and failed to pull out of another bitterly-contested takeover, buying Chris Ingram’s CIA media group for £400m, citing the 9/11 attacks as a material change of circumstances, which seemed a mite tasteless. CIA’s MediaEdge business in Italy has since caused Sorrell some grief as he fell out badly with its bosses although the deal has undoubtedly contributed to WPP’s bottom line.

And in 2008 he bought the TNS research business for £1bn, a deal that looked rather toppy as the credit crunch struck although market research seems to have held up pretty well.

The upshot is that WPP, which started out as a shell company called Wire & Plastic Products investing in design businesses, is now the second-largest marcomms group in the world after Omnicom with major ad agencies (JWT, O&M, Grey and Young & Rubicam), big media buyers (Mediacom, MediaEdge, O&M Media), researchers (TNS, Millward Brown, BMRB) and literally hundreds of other smaller companies in the fold.

Sorrell’s plan, as he tells Campaign’s Claire Beale in this interview, is to reconstitute the full service agency model through WPP, teaming the best people in the empire to offer clients everything they need.

So this is the first question he needs to answer. Can people from different companies (albeit within the same group) work as effectively as those from one single company? So far the evidence from clients HSBC (broadly successful) and Samsung (wholly unsuccessful) is mixed.

The second one is, are his big blue riband agencies as good and successful as they were before they joined WPP?

I would say not, with the possible exception of Grey. JWT, the first big one he acquired, is a pale copy of the global thoroughbred it used to be.

One problem is that they seem unable to win domestic business. Winning the occasional whopper global account is without doubt vital (as is hanging on to the ones you’ve got). But a steady stream of national business is what keeps the agency buzzing and the creative work fresh.

The third goes back to the introduction to Claire’s piece where she talks about WPP’s mission statement to ‘manage talent’ to the benefit of its clients, and profits of course.

To an extent this is about the global teams referred to earlier. But it’s also everybody in the organisation. And by and large executives who find themselves working for WPP, particularly those whose companies have been acquired, do not enjoy the experience.

This is mainly due to the financial rigour they face daily which Sorrell (and his shareholders no doubt) would say is essential to running a global listed company.

But Omnicom is also a global listed company and, most pundits would say, a much more agreeable company to work for. In consequence its organic growth record is better. These are ‘people’ businesses after all.

So the third question is, can Sorrell chill a little and trust his people to develop their various businesses (and talents) so WPP can continue to grow without the need for regular big acquisitions?

WPP is a giant company and one that was British-owned until Sorrell decided to move its tax domicile to Ireland (another decision that looked a little cheap).

So its creation is a major achievement and nearly all of that is down to Sir Martin.

At 65 Sorrell has about five years left in the CEO’s hot seat. He will try his damndest to show that he can still run as fast as his rivals.

But his main task is to groom some new leadership candidates. The best way to do this, and ensure that the company’s next 25 years start successfully, is to relax his iron grip a little.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.