"It's a bathtub." Sir Martin Sorrell is emphatic. It's an
uncharacteristically creative description for what has become the
subject of the moment, recession, though the grandeur of Claridges is
not exactly the sort of place one can really discuss economic hardship
with any degree of conviction. Particularly since any breakfast with
Sorrell is pitted with interruptions from tanned, bespoke-suited
businessmen swapping self-satisfied bonhomies. "Playing cricket in the
south of France next month Martin?"
Still, recession is top of the menu and forget pussy-footing around with
words like downturn or slowdown. Sorrell says this is, "net, net", a
recession and it's bathtub-shaped. "You have the tap end, which has a
sharp decline at the beginning, then you get the corrugated bit at the
bottom with lots of ups and downs and then at the other end there is a
The question, of course, is how long before we can rest on the gentle
curve of the upturn? "Ooo, I think it's going to last for some time. And
I think this time next year we'll be moaning about the fact that it's
still here." When he made similar predictions in a recent Royal
Television Society speech, 22p was knocked off the WPP share price, so
seriously does the City take Sorrell's economic views. Sorrell, though,
displays the confidence of a man who knows his enemy - knows not only
the shape of the recession, but where it began (Australia, post-Olympic
Games), how it has spread (it started in the technology, media and
telecommunications sectors and although it has reached the old economy
now, it's much more patchy there) and how to cope with the effects.
And despite the fact that WPP no longer sits almighty as the world's
largest communications group, Sorrell says the company is in some ways
better insulated than it was the last time things got tight. "We have
considerably less debt, we have fewer earn-out commitments, our business
is very much stronger and we have more in the way of flexible costs.
But, you know, I think it's going to be quite difficult." Of all WPP's
businesses he says public relations and public affairs have been the
worst hit, followed by branding and identity, healthcare and specialist
communications. Advertising and media investment management is the
second least affected, "probably more resilient than we thought it was
going to be", while information and consultancy has been "very
It is this spread of disciplines, this wider business base, which
Sorrell concedes should help make the slump a bit easier to ride.
"There's no geographical insulation now, there's nowhere to hide.
Everything is globally linked. But, functionally, having a broader
business base, you can survive better."
Yet with this broader base come other issues, which Sorrell might have
hoped to have a little longer to sort out before recession hit. Getting
the structure of WPP right, particularly after the acquisition of Young
& Rubicam last year, is a major preoccupation. But then it's also an
opportunity to have a bit of a dig at the opposition: "I think the
biggest issue facing IPG, Omnicom and ourselves is how we run our
businesses structurally. You can see it with IPG post-True North.
There's an attempt to try to 'organise' things and form partnerships
that have no logical basis whatsoever other than you have a collection
of businesses and a collection of names like alphabet soup that you have
to try to piece together.
There's no strategic logic to it, it's sort of attempting to put a
strategy in place after the event." Sir Frank Lowe, perhaps the most
obvious victim of IPG's attempts to deal with these issues, might
"I think some of the peregrinations that IPG is going through at the
moment - and will go through - are emblematic. The biggest issues for
WPP, Omnicom and IPG will be are these companies too big, are they well
run, are they integrated? There's actually quite a lot of resistance
from people who say 'I don't want to be part of a big group'. You saw it
in the reaction to The Partnership with people saying 'I don't want to
be part of a nice neat little organogram, I want to be part of something
that means something'."
It's really quite charming, this knack Sorrell has for slagging off the
competition as though his comments are so reasonable and sensible that
they're motivated by nothing more than common sense. Take his views on
how WPP sits among the big three holding companies. "We have a totally
different philosophy from Omnicom or IPG. For right or wrong, we're
added-value-focused on clients and our people." It's a cheeky thing to
say, of course. And it would be a bold John Wren or John Dooner (the
heads of Omnicom and IPG respectively) who argued that WPP was wrong to
focus on adding value to clients - although how successful the
organisation has been in delivering on this promise is a matter of
If WPP is focused on adding value, then that has to be delivered
coherently across a range of its services and, while it might claim to
have tackled integration more effectively than its two key competitors
... well, that's not saying much. WPP is still far from acting as a
unified whole, an emporium of communications services. Some of its key
staff find this unbearably frustrating, others clearly relish causing
Partly this is down to Sorrell's own management style. He is much more
likely to make his views felt and then sit back and wait for his staff
to get the picture than knock heads together and force through a
politically sensitive issue. So Sorrell was talking about pooling WPP's
media brands into a global network, MindShare, years before the agencies
involved actually pulled their fingers out and lit the touchpaper. And
the MindShare management was left to fight most of the battles required
to get the creative agencies on-side alone. Even now in the US MindShare
and J. Walter Thompson are at odds over the future of Ford Motor Media,
which spends well over $1 billion a year on media and yet which
resolutely sits within JWT rather than MindShare.
Sorrell has refused to take sides, even though the issue threatens to
undermine MindShare's positioning. "It's up to Ford to decide," is all
he will say, though he does promise: "If clients want integration of any
of our businesses, they'll get it."
But partly, too, it's that Sorrell - like his competitors - is so often
held to ransom by key staff who have client relationships by the
If Sorrell fulfils his ambition of driving client relationships across a
range of WPP businesses, then this will arguably become less of a
For the moment, though, it remains a very real issue.
"Our biggest problem is the enemy within," Sorrell concedes. "The
challenge is to get people to operate as seamlessly as you can. I'm
philosophical about it, but I get very upset when people don't work
together because I think the power of what we've got is so great when we
put it together.
You tear your hair out when people sit in their little box and refuse to
co-operate or when they fight with one another.
If people look at us and say 'My God, they've got MindShare, they've got
The Media Edge (Y&R's media brand), they've got Kantar. God, if they put
that little lot together they'd blow everybody away', then we have to
think about that."
Integration is clearly a major mission for Sorrell but his brands'
creative credentials still nag away on his to-do list. "One of our big
objectives is to improve the creative quality of all our businesses, not
just our advertising business, and that's still something we have to
work on." He's happy with the positioning of his four (yes, don't forget
Red Cell, though you could be forgiven for doing so) creative networks.
"Ogilvy has got its brand stewardship offer together very powerfully,
it's highly integrated and the creative profile of the agency is very
strong and getting stronger. I don't think either Thompson or Ogilvy get
the recognition they need, though Ogilvy gets more recognition. I think
Thompson still has to convince people externally that it's as strong as
it is. Y&R is more silo-driven - a bit like the McCanns offer, but more
powerful because of the strength of the brand.
Red Cell focuses on the very large markets and I think there's a major
opportunity there to take the middle-ground positioning that everyone
else has vacated. Leagas Delaney has shown how difficult it is to occupy
that territory, but their problem is that they're doing deals with the
Sorrell has held his own acquisition talks with Leagas - "I don't think
they're particularly interested" - so where is he looking now for
"There is room for us to buy someone else, though it comes back to that
management issue - at what point in time is 'a lot' too much? I'd like
some time to think through what the best organisation is, rather than
get involved in some frenetic buying spree.
But that doesn't mean we don't continue to buy more medium-sized
We've just got to think carefully about our structure and continue to
strengthen our four agency brands."
In truth, he's still very much concerned with bringing Y&R into the
fold, or "digesting" it, as he puts it. When he took on the business
Sorrell says he felt pretty comfortable with about $1.3 billion
of Y&R's $2 billion revenues. "The $700 million in the
advertising empire I have felt historically less comfortable with. But
they've made some good appointments, some real changes, and I think
things have stabilised. Hopefully, externally people won't notice much
difference now that Y&R is part of WPP. It will still be Y&R, but more
so. I would hope that the proposition is clearer. The important thing is
to focus on the strength of the individual brands within the Y&R group
and provide some integration mechanism. I hope what you'd see from a Y&R
group point of view is a more cohesive and integrated offer than you've
seen before." He adds that he expects Y&R to make a significantly larger
return than WPP's average cost of capital (about 9 per cent) within the
next four or five years.
The acquisition of Y&R put WPP back at the top of the global rankings
for a short time, before IPG hit back with the True North deal. Does
being number one matter to him? "No, it's not overly important. What's
important to me is that the business is as strong as ever. With the deal
we ended up improving the quality of our business."
One acquisition Sorrell seems to have been toying with is that of
Tempus, Chris Ingram's media network in which WPP holds a 22 per cent
stake. Havas has just laid a £425 million deal on the table and
Sorrell, miffed, is doing his sums, preparing a response - which could
be a counter-bid. Over breakfast, though, before the Havas offer is
announced, Sorrell says: "I do think there are a lot of people inside
Tempus who think that it would be an extremely good idea to get together
with parts of WPP. Tempus itself spent an enormous amount of time
talking to Y&R and TME and there is a tremendous industrial logic to
Tempus and TME getting together." Sorrell has also talked to Aegis about
swapping the Tempus stake for Aegis shares, but insists: "Looking at
Aegis is not top of our agenda. I think we'll just bide our time and see
Nearer the top of his agenda is building on WPP's existing relationship
with Dentsu, through the old Dentsu/Y&R association. "I think that was
an abused relationship, Dentsu's move into BCom3 upset Y&R and Y&R's
move into WPP upset Dentsu. So we're working hard to build the
relationship again. I'd love to grow our relationship with Dentsu."
Doing so could prove crucial if Sorrell is to achieve his ambition for
greater geographical parity across WPP businesses. The US accounts for
45 per cent, Europe for 35 per cent and Asia-Pacific for 20 per cent;
his ambition is a third, a third, a third - and Japan and China are key
targets. Similarly, he wants more functional parity so that only a third
of WPP's business is in advertising and two-thirds is outside.
Along with fighting the recession and integrating Y&R, these long-term
strategic goals are, Sorrell says, the things that keep him awake at
"When you've founded a business I think your attitude is very different.
It's very much part of me and I worry about it as I would worry about my
family." He's taken to insisting that WPP is a parent company, rather
than a holding company, and admits that it is important to him how his
staff view him, "though my image is not something I work particularly
hard at; I think actions speak louder than words".
Perhaps, then, there is a tender side to Sorrell, although colleagues
down the years would argue the point. If he does have a softer
under-belly then it may be a certain insecurity, a fear of failure,
despite his tough talking. "I do tend to focus on the bad bits," he
"I have been described as a serial pessimist." It's hard to imagine
Sorrell fretting in the small hours, but then that's recession for you.