Two’s company. Three’s a world-beating advertising and
communications group. Sir Martin Sorrell, the group chief executive of
WPP, has always believed that size matters.
And now that he has secured Young & Rubicam as WPP’s third network -
joining J. Walter Thompson and Ogilvy & Mather - he will need to prove
that biggest is best.
WPP took over from Omnicom as the world’s largest advertising group last
Friday when Sorrell finally pulled off a dollars 4.7 billion deal after
months of on-off negotiations with Y&R.
Sorrell boasts: ’There is a philosophical and geographical fit between
Y&R and WPP. As a result of the deal, the US becomes more important and
the UK slightly less important. Mainland Europe and Latin America will
remain roughly the same.’
Tom Bell, now the chairman of Young & Rubicam Inc, has ceded the
ultimate running of Y&R to Sorrell. Bell only took over Y&R at the start
of the year and was expected to become a player in the WPP group.
’Two cooks spoil the broth,’ Bell says, quoting his mother’s mantra for
keeping his father out of the kitchen. ’Every organisation needs a clear
leader and Martin is a proven leader. I will work with him to ensure the
best transition and then, at an appropriate time, I will go on to do
Bell’s capitulation is gracious. He could have struggled on to maintain
Y&R as an independent network, but has instead bowed to the inevitable
sooner rather than later. Bell knows that the advertising industry is,
from an international perspective, still relatively fragmented and that
consolidation is unavoidable.
While other global networks, such as Grey and Saatchi & Saatchi, insist
on keeping their options open, Y&R has, after a short courtship,
accepted the most eligible suitor on the block.
It is to Y&R’s credit that it was such a sought-after partner. Publicis
had been more than willing to step in as second choice if the WPP deal
didn’t go through.
The logic of the WPP deal is unmistakable. There are virtually no client
clashes and there will be no more headaches, either, for the Ford team
at Y&R. JWT and O&M have the bulk of the Ford business in the US but Y&R
has been successful in monopolising the client in Europe after a
protracted battle against O&M for the business.
Kevin King, who heads Y&R’s European Ford team, will no longer have to
wake up every morning knowing that Sorrell is plotting furiously to take
the business back from him. The threat was becoming so great that Satish
Korde, the global head of Y&R’s Ford business, had been brought to
London from New York to safeguard the account on an indefinite
Despite the cynics’ claims that Y&R’s underlying health is not as robust
as recent figures suggest, the network has a good global breadth and
It also has a brand name that means something in each of the 73
countries where it has a total of 339 offices.
As the fourth-biggest agency in the US, Y&R is still winning business -
despite some recent high-profile losses - and has maintained an 11 per
cent organic growth rate. However, that rate will not be good enough for
Sorrell’s notoriously demanding regime and Y&R is, in truth, way behind
the top three in the US.
Y&R is globally successful in areas outside advertising. One of its
public relations arms, Burson-Marsteller, is the world’s largest PR
company, while Cohn & Wolfe is also a respected name in the same market.
Y&R’s direct arm, Impiric, is one of only two global brands in its field
- the other, OgilvyOne, is also owned by WPP.
The Media Edge, Y&R’s full-service media network, has been struggling to
establish itself as a global brand and is the biggest question mark in
the portfolio. Nevertheless, The Media Edge is a respectable enough
network, although its long-term future must be open to question.
Sorrell hints at ’opportunities’ which ’may come to pass’. His plan for
media in the enlarged WPP is, he says, to ’take the Japanese approach
and look at it ’bottom up’. If Irwin Gottlieb (MindShare) and Beth
Jordan (Media Edge) thought it was a good idea to merge the two, then
yes. The only issue is whether or not they see an advantage.’
It is not yet certain that WPP shareholders see any advantage in the
deal. Share prices went down in anticipation of the final settlement,
perhaps because stock markets recalled the difficulties that Sorrell had
after taking over his other two agency networks.
But the JWT (1987) and O&M (1989) deals came about through hostile bids
and both dealt severe blows to Sorrell’s credibility. The Y&R deal,
although fraught at times, has ultimately been an amicable one. Bell
claims that there was ’no animosity. Just good hard fighting. We both
have the responsibility to do our best for our constituents. That’s what
negotiations are all about.’
Sorrell’s expectations are that the deal will enhance long-term growth
prospects and lead to higher organic growth. He has also promised
shareholders ’synergies’ of dollars 30 million - although he will not
admit to redundancy plans, he claims that ’rejuggling’ and the
purchasing and leverage savings that size brings will all contribute to
the cutting of costs.
Apart from the numbers, Sorrell is determined that the new, improved WPP
will ’attract, maintain and motivate talent. WPP will become the finest
place to work for creative talent.’ He doesn’t like the suggestion that
although WPP has overtaken Omnicom in the billings league, in the
creative league the number one spot remains unchallenged.
’I bristle when people are dismissive of our creative capabilities,’
Sorrell says, pointing out that creative minds are just as relevant to
market research as they are to advertising. But he admits that ’there is
more to do’ at WPP and that he admires Omnicom’s creative emphasis.
Only up to a point, though. ’Strategically, creativity is not a reason
to be. It is not the way to build a business. You can group creative
agencies together but what is the strategic benefit for them of being
part of a group?’
For WPP, which still makes the wire and plastic products from which it
took its name, the onus must be on maintaining its number one spot.
Having committed on a grand scale to a diversified but strategically
focused future, Sorrell has set himself, and WPP, a very public
challenge to remain number one.
Advertising J. Walter Thompson,
Ogilvy & Mather,
Direct Marketing OgilvyOne
Interactive wpp.com, Syzygy
Public Relations Hill & Knowlton,
Branding & Design Enterprise IG
Advertising Young & Rubicam
Media The Media Edge
Direct Marketing Impiric
Interactive Y&R 2.1
Public Relations Burson-Marsteller,
Cohn & Wolfe
Branding & Design Landor Associates