Media is the elephant in the living room in l’affaire Sorrell

The Times reckons that internal candidates to succeed Sir Martin Sorrell as CEO of WPP are being interviewed by the board, a board which some reckon contains one or more directors who want rid of the WPP founder. Sorrell (below) is under investigation for “personal misconduct” and other issues. One source reckons news of the investigation was leaked by a board member to the Wall Street Journal (another part of Rupert Murdoch’s empire) last week, which set the hare running.

WPP’s board is also said to be” constantly reviewing” external candidates although, if Sorrell does depart in a few weeks (the supposed duration of the “investigation”) someone internal is presumably going to step up for a time as credible external candidates are, presumably, currently gainfully employed and on long notice periods.

Meanwhile Sorrell’s friends, of whom there seem to be a growing number, are saying it’s all a stitch-up. Either way it’s hard to see how the hitherto autocratic CEO can work with such a board.

One of the consequences of Sorrell’s modus operandi is that few, if anyone, within WPP has much of a relationship with the board. Most people couldn’t name them all. But the higher ups all know “Martin,” although few would claim to be pals. Like it or not, he is the company they joined and work for. They may not like all the things he does but many admire him for his commercial acumen, in particular his ability to bring in big clients. Under Sorrell WPP has usually paid well too.

At the same time as trouble over Sorrell has been brewing some of WPP’s big guns have been leaving. The latest is Irwin Gotlieb, latterly global chairman of its giant media operation GroupM. Gotlieb was GroupM’s first CEO in 2003 and stepped up to chairman in 2012. He’s staying as a consultant. As is Rob Norman, formerly head of digital. Dominic Procter, Gotlieb’s long-time sidekick, left a couple of years ago. Brian Lesser, who built up programmatic arm Xaxis before moving to a group role, left for AT&T last year.

Media has driven WPP’s profits in recent years but all that began to come to an end with the US Association of National Advertisers (ANA) report in 2016 into so-called undisclosed media rebates, alleged kickbacks from media owners. All the holding companies, including WPP, have denied any such behaviour but mud sticks. The report was prompted in the first place by WPP “whistleblower” Jon Mandel, formerly of MediaCom.

Most of these top GroupM execs are of a certain age and entitled to a well-earned retirement. But their timing is also fortuitous as running a big agency media operation isn’t the one-way street it used to be before such revelations (if indeed they be.) Additionally there’s the almighty pressure now being exercised by Google and Facebook who, unlike media owners before them, don’t need the likes of GroupM to spend billions with them because clients are increasingly reconciled to doing it themselves.

Whatever happens to Sorrell, this is arguably the biggest issue the WPP board and whoever occupies the CEO hot seat, faces.

Update

Here’s a rather relaxed Sir Martin Sorrell speaking to Campaign Asia about the problems facing WPP, before the investigation into his conduct emerged.

In essence he says the problems the company faces are a combination of long-term structural change combined with short terms pressures, like client cost-cutting. Consumer packaged goods (CPG) companies are the villains of the piece: historically 30 per cent of WPP’s business but now enforcing a “disconnect” in the US and Europe between GDP growth (generally good around the world) and ad growth.

What’s missing is the question of trust. Do such clients still trust their agencies?

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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.

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