While WPP agencies and clients in India are unlikely to be affected by his exit, some rival agency honchos are relieved that that they will ‘no longer be up against Sir Martin Sorrell’s personal charisma and involvement in business’
BY SRABANA LAHIRI
Eversince news broke last week that Sir Martin Sorrell, founder and CEO of WPP, the world’s largest marketing and advertising conglomerate, was stepping down on the back of allegations of ‘personal misconduct’ by the WPP Board, it has been a week of solid speculation in the industry as to the fallout of this unexpected exit. The turn of events itself is said to have been machinated by the Board, unhappy with Sir Martin’s massive salary and allowances and his autocratic stance, while the company’s shares dropped by more than 30% in the last 18 months. In fact, an industry insider, who did not want to be named, said, “When things came to a head, and share-holders exerted pressure, the Board levelled charges against him that caught him on the wrong foot, but at the same time were not serious enough to implicate the Board itself.” That WPP is being tight-lipped about the exact nature of those charges adds credence to this theory and stokesthe rumour mills. But at the heart of the entire crisis is of course the reduced ad spendsand reinvention of the advertising model by the likesof Unilever and P&G,and the advent of companies like Accenture, Amazon, Facebook and Google, that has affected not only WPP but the entire advertising industry.
‘HIS WAY OR THE HIGHWAY’
Meanwhile, in India, where Sir Martin has been a regular visitor with a deep involvement with the stakeholders in the business, there are mixed reactions to the news of his exit. While some in the Indian advertising industry are heaving a collective sigh of relief that they will no longer be up against Sir Martin’s personal charisma and intervention in the business arena, that gave WPP companies a huge advantage, there are others who say they will miss him as an honourable rival while vouching for his extraordinary acumen, immense knowledge of the market and reach at every level.
Stories doing the rounds include how Sir Martin used to call or meet prospective clients himself at crucial times in India, promising to take them global, help them achieve results, thus ensuring that they crossed over to his side at the next review or opportunity. Apparently, he has even been known to exert pressure on the Indian arm of an MNC through their global offices, and subsequently call the in-charge in India. It would be a big deal for anyone to be approached by the big man himself, and his charisma would always work. But even those who have lost big business to WPP thanks to Sir Martin’s direct intervention have a grudging respect for him and admire his diligence. “For him, it would always be ‘my way or the highway’. And he always got his way,” a media agency leadersaid. No wonder then that WPP companies’ dominance in the India market is higher than it is in most other markets, and Sir Martin gets due credit for consolidating the business in India.
WHEN SIR MARTIN OPPOSED BARC
Another story doing the rounds is how Sir Martin put up a roadblock in the way of formation of the Broadcast Audience Research Council (BARC) in favour of TAM Media Research, a JV between WPPowned Kantar and Nielsen. The industry apparently stood as one then - including those who worked with WPP companies – to push for BARC, and finally Sir Martin agreed to the TAM-BARC deal and even hosted a lunch for all BARC Board members.
As for the fate of the WPP business in India now, while WPP companies are extremely strong entities, unlikely to break down in a hurry, “there are chances that rivals may close in for the kill, offering their clients slightly lower rates, some incentives, cite the leadership turmoil and try to win them over”, according to a leading agency professional. Some conjecture also revolves around the role of CVL Srinivas, Country Manager, WPP India. Some see him in a larger role going forward, while others think it will depend entirely on the kind of equation he has with the new WPP CEO when the appointment is announced. Until then, we in India wait and watch!
A FINANCE WIZ IN AD WONDERLAND
BY AMBI PARAMESWARAN
There has been a lot written about the sudden exit of Sir Martin Sorrell from the agency group that he assiduously built over the last 30+ years. Many reasons have been floated and Indian industry leaders have been gushing forth about how he was a great believer in India and did Indian industry a great service through his long innings as CEO of WPP (by visiting us as often as a few times every year, etc).
So a disclaimer will be in order before I write my piece. I never did work for an agency that belonged to WPP. And the only time I met Sir Martin was when the Broadcast Audience Research Council (BARC) Board was invited for a lunch with him on the successful completion of the merger (as he called it) or take-over of WPP-owned TAM by BARC. The conversation around the lunch table was very courteous and I was left at a loss to figure out why David Ogilvy had called him an ‘odious little jerk’. But more about this later.
A little trip into history would illustrate where Sir Martin probably drew his inspiration from. The first agency that went global was McCann Erickson and ad historians tell us that they went global as their lead clients like Coke went global. Under Marion Harper, they created the first holding company, Interpublic. Marion Harper under the Interpublic Group (IPG) umbrella integrated several allied marketing services companies, including research, public relations, promotions, training, etc (a lot of scribes believe that Sir Martin created the world’s first integrated agency model, sorry you are wrong!) IPG later acquired other agency brands including Marshalk & Pratt, SSC&B Lintas and FCB (disclaimer again: I worked with FCB).
Marion Harper started his life in the copy research department and then went on to become the head of McCann Erickson. He also conceived the idea of a holding company with multiple agencies handling competing accounts. But he was a true blue, dyed in the wool advertising professional. He passed away in 1989 at the age of 73. You will later realize why the age 73 has an interesting coincidence.
Sir Martin Sorrell did what Marion Harper did, but there were many differences in the way the two men built their empires. The starting point of Marion Harper was the copy desk at an agency. Sir Martin’s first taste of advertising was as the finance head of Saatchi & Saatchi. And when he went on to build a marketing communications empire on the back of a shell company, WPP, he did it as a shrewd financial engineer. In the process of building the advertising/marketing services behemoth, Sir Martin also built a name for himself as a world leader. Given his astute financial brain, he saw before most others that there was big money to be made in a consolidated media planning and buying operation. So he created possibly the world’s first global media buying organization when he dismantled JWT’s and Ogilvy’s media operations.
Sir Martin was indeed the first financial wiz to run an agency holding company. Others have followed, but till then the only leaders who went on to run agencies or holding companies were from the servicing side (‘Suits’ as they were known derisively) or from the creative/copy side (MadMen).
The creation of the media agency that stood apart from the creative agency was a new phenomenon in the USA (it existed in the Continent in some form and in Japan ad agencies were also media brokers, taking positions and buying media at ‘wholesale’ rates). The dismemberment of the media arm from the creative arm in one sense made the media teams stronger, but it also immensely weakened the ad agency structure.
Sir Martin did what Marion Harper did, but on a grander scale thanks to his knowledge of the concept of financial leveraging. His acquisition of agencies like Ogilvy, Young & Rubicam and Grey are stories that can be made into mini movies, or even a Game of Thrones-like mega series. As some of us were wondering when the big ticket advertisers would catch the flu and run from WPP as it started hosting their competitors under one roof, Sir Martin tap-danced on egg shells to manage relationships that were in direct conflict. He did the impossible. His agency group worked with Unilever and P&G, P&G and Colgate, Coke and Pepsi, just to name a couple of conflict relationships. It is reported that in many of these cases, it was Sir Martin who worked the magic at the Board level. While IPG and other holding companies were struggling with account conflicts, WPP managed them with great panache.
Sir Martin also saw the rise of digital and data and did some big acquisitions in that space. He also invested in nurturing research and created an internal award system. And like many other Indophiles from the UK, he too fell in love with India.
The reasons are not far to see. As he acquired Ogilvy, he realized that with JWT and Ogilvy, he had two of the biggest agencies in India, both of which had deep relationships with India’s biggest advertiser, Hindustan Lever (now Hindustan Unilever) and numerous other large Indian companies and Indian arms of MNCs. He became a fan of India and spoke about the potential of Asia and India in particular. He also created the media agency GroupM by dismembering the media arms of JWT and Ogilvy. His competitors did not move fast enough and lost precious time as GroupM consolidated its Indian media assets.
I do have a few issues that I think Sir Martin could have helped us with. I am sure during his early trips to India he would have realized that Indian agencies still operated under the 15% agency commission system. This enabled them to build strong capabilities, hire from premier business schools, invest in planning/research, etc. So I was surprised that it was one of his large agencies in India that went against the 15% system to quote an absurdly low fees to a large client. This pretty much started the decline of Indian agencies’ long run of good profits; a second blow after the dismemberment of the media arm.
The other grouse is that in spite of praising the Indian operations of WPP, he did not poach the Indian agencies for global positions. The one person who was moved to the Global HQ of a large media agency brand in the WPP stable came back to India pretty quickly, not too happy with the experience. It is to be noted that Unilever picked many of its global leaders from India. Was this an impossible thing to expect from someone who claimed to love India and the talent it offered?
Thirdly, Sir Martin could have used India as a back office for a lot of WPP operations. He could have done what Sapient Nitro did some years ago. I remember discussing the possibilities of doing a back office operation for my international agency operations with someone senior at WPP in India. As I shared my tales of woe, this person too felt that Sir Martin did not realize the potential India could offer. While Sir Martin spoke of the threat from digital majors and consultants, he did not make efforts to see how the business could benefit from the talent base that existed in India. In the last few years, there have been some moves to offshore work, but it is still miniscule, I think.
The exit of Sir Martin came a lot more suddenly than his rise but was probably more sensational than the acquisitions that continued relentlessly. British newspapers are a lot more critical about his adventurism with share-holder money. WPP stock has been the worse performing stock among its peers; and believe you me, the other advertising stocks have not set the street on fire either. Three years of steady decline, a loss of almost 35% of its valuation in just 18 months, was something that probably Sir Martin could not stomach. Had he run out of all the pages in his play book, I wonder.
The Financial Times had an interesting observation. Sir Martin owned just about 1.5% of WPP stock. While he was the CEO for the last 33 years, he did not have any ‘non-compete’ clause. This got me wondering. We speak of Board governance in India and how we are lackadaisical about controlling the management, and Boards are but ‘rubber stamps’. What was the WPP Board thinking when they allowed Sir Martin to leave, without any strings attached?
As the FT observed, though Sir Martin is 73, he is the father of a young child. So will he start a new innings in advertising, cherry-picking pieces of WPP? Or create a new agency model for the digital age? Will WPP survive his sudden exit?
The Game of Thrones Season 73 has just begun. Be ready to binge watch it till its gory end.
(Ambi Parameswaran is an independent brand strategist, author and founder of Brand-Building.com, a brand advisory. The opinions expressed here are his own.)