Where do we stand on Martin Sorrell? There seems to be a full gamut
of views ranging from 'cost-cutting financier' to 'genius businessman in
almost everything in touches'. His fans say that he has been
underestimated, too frequently dismissed as the grey numbers man with
the mind-boggling incentive package. His critics include those who
continue to question whether he has 'enriched' the industry since he
bought J. Walter Thompson and Ogilvy & Mather. Meanwhile, as the
fifth-best performing FTSE 100 index stock in the past five years, WPP's
track record speaks for itself.
In any case, Sorrell's the perfect interviewee: no-nonsense, none of
that steering the conversation towards his pet subjects malarky, only
getting narky when deliberately crossed or probed.
So naturally we start with why his arch rival, Omnicom, is considered
more attractive than WPP to potential targets.
While both groups are equally convincing about their strategic purpose,
there is a feeling that Omnicom manages the people process, the
sensitive dealings with iconoclastic agency entrepreneurs and their
advisers, much better; that WPP turns utterly ruthless once it's snared
its target and that the trait must come from Sorrell himself.
'That depends who you talk to,' he retorts. 'Our vision is different to
Omnicom's; we want people to have the benefits of being part of WPP. I
don't know how well Omnicom plays the creativity card but I don't think
it's a long-term strategy, it doesn't add value to the constituent
parts, which is the reason for groups to exist.'
It's more than three years since Campaign's last major interview with
Sorrell. On that occasion he spoke of creating MindShare by pooling the
media buying and planning functions of O&M and JWT. This time, with
Irwin Gotlieb poached from MediaVest Worldwide and briefed to 'make
MindShare happen' in North America, the focus of interest is back on the
agencies - JWT, O&M and Conquest.
We start with JWT. A year ago it was destabilised by the loss of Sprint
(to McCann-Erickson) and Dell (to BBDO) coupled with the effect of
extensive management changes in New York, Chicago and San Francisco.
In February this year Charlotte Beers - previously the chief executive
of O&M from 1992 until 1996 - was appointed on a two-year, part-time
contract as worldwide chairman of JWT. It was a support role to JWT's
chief executive since 1997, Chris Jones. But it had a single purpose:
get new business.
However, none of JWT's recent run of new-business successes - they
include Qwest, NTL, Kimberly Clark, UDV and Miller - came as a result of
Beers' contacts. Seven months after her appointment, tellingly perhaps,
all Sorrell will offer on the subject is: 'It's too early to judge.'
Sorrell suggests that Jones has taken a broader view of JWT as a
business and of the industry than his predecessor, Burt Manning: 'JWT
under Chris is more aligned to WPP's strategy and structure than was the
case under Burt. Chris has attached great importance to Thompson Total
Branding and rightly so.'
Why, then, can't JWT seem to put its direct offering in place, while its
sister network, O&M, has such a strong direct brand in OgilvyOne?
Sorrell says: 'Thompson has a direct business under various names around
the world and it needs to be strengthened further: Chris is working on
that. And O&M is lucky in that David Ogilvy was strategically astute
enough to focus on the direct business from the moment it was
Sorrell is more forthcoming on the impact of the death in July, at 88,
of David Ogilvy, the founder of the Ogilvy Group. 'In a way I think
David's death has had a galvanising effect on O&M, making people
conscious of their heritage.'
And so to Conquest, the European network which was founded by WPP in
1982 and built around the concept of servicing European-based
multinational clients. Alfa Romeo still accounts for almost a fifth of
Conquest has a French chairman, Dominique Simonin, and an Italian chief
executive, Luca Lindner. Fast-growing, it still accounts for less than 2
per cent of group revenue. Sorrell's plan is to turn Conquest into a
mid-sized network on the back of partnerships in North and Latin America
and the Asia Pacific region. So far, in theory at least, he has one of
the three partnerships in place via WPP's 30 per cent holding in the
Asian Batey network, which will rise to 80 per cent over the next five
It is surprising to hear Sorrell argue in favour of the mid-sized
It flies in the face of recent advertising history where the likes of
GGT, Chiat Day, TBWA, Hill Holliday, Ammirati & Puris and Rainey Kelly
Campbell Roalfe have been snapped up by the major groups. The
irresistible whiff of money, combined with the superior geographical
resources of the big boys, have seen even the most dedicated advertising
entrepreneurs succumb. So why has a mid-sized network positioning
'As in every market, if things polarise too far a gap opens up,' he
says. 'And one of the theories we've always had is that our
profitability, just like our clients, follows the 80/20 rule. In other
words, 20 per cent of the offices provide 80 per cent of the profits. So
perhaps there is a positioning for a network focusing on the big
Observers look at WPP's structure - the trio of advertising agencies,
MindShare and other media interests, prominent research and PR brands,
numerous specialist marketing communications companies - and question
where the next acquisition will come from. There are fresh bid rumours
emerging every week and WPP currently features prominently in the global
mating gossip as a suitor for one of 'the big five', namely, Young &
Having floated last year, Y&R (gross income dollars 1.5 billion) would
be a big bite to chew off for even the most voracious of suitors.
Employing the famous old Saatchi technique of wishful thinking out loud,
Sorrell teases: 'I think WPP and Y&R would be a formidable combination.'
However, he denies that any formal approaches have been made and that he
or WPP owns any Y&R shares.
For WPP the deal certainly looks seductive enough, principally because
it would gain access to further Ford business including the portion Y&R
won from O&M last year. And Y&R, though a strong brand with good global
spread, is relatively deficient in senior management since the flotation
tempted some senior executives to cash in and leave.
There are two stumbling blocks. First, Y&R's management has never
declared itself open to Sorrell's blandishments. In fact, he admits,
'they hate it when I suggest that the only difference between WPP and
Y&R is that we're multibranded and they're unibranded'.
Second, would Unilever, a leading WPP client, entertain the conflict
with Y&R's Colgate business? Maybe, given that Unilever's attitude to
conflict is reported to follow the P&G model, which theoretically allows
holding companies to handle rival brands at sibling shops and frees
sister shops to handle competitors' brands in other agencies.
In any case, buying a network as big as Y&R runs against the recent
grain at WPP. The story has been one of improved margins, revenue
growth, cost control ('control, not cutting', Sorrell stresses) and
fiscally prudent acquisitions secured mostly for cash, not stock.
Some of Sorrell's managers would like to see WPP making bold
acquisitions and taking fewer investment stakes: 'Sometimes people don't
want to sell us more than 20 per cent,' he retorts. 'And sometimes we
don't want to take 100 per cent because we don't know enough about the
people. We're trying to position WPP as an investment portfolio, to add
value by taking positions in the growth areas. We're likely to end up
better off that way.'
Three investments WPP has made recently bear particular scrutiny. The
first, in Tempus, was a tactical purchase of about 14 per cent, secured
when WPP bought a disgruntled shareholder, Blugroup Holding, whose sole
asset was its stake in CIA. WPP has since increased its stake to 19. 8
per cent - a figure which CIA's chairman and founder, Chris Ingram,
continues to regard as an affront. While Ingram sees plenty to dislike
in WPP and its founder, Sorrell is undeterred: 'We want to build the
finest media planning and buying company in the world and in the long
term CIA could become part of that. Chris Ingram may not want it but
others in his organisation do.'
Chime Communications was more strategic. Two years ago, WPP paid pounds
15 million for a 29.9 per cent stake in Tim Bell's PR operation and
Chime simultaneously bought HHCL & Partners. Bell is chairman while
Piers Pottinger, Chime's joint chief executive, runs the PR operation.
Rupert Howell runs the advertising operation and is joint chief
executive of Chime. Sorrell talks of this deal in terms of people: 'The
opportunity to work with Tim, Piers and Rupert was too good to
Then there's Asatsu, the third-largest Japanese advertising agency
behind Dentsu and Hakuhodo. WPP bought a 20 per cent equity stake in
Asatsu a year ago and the Japanese company took a reciprocal 4 per cent
stake in WPP.
The plan is for MindShare to work with Asatsu in Japan and Asia on media
planning and buying and to rationalise Asatsu's agency businesses in
In equity terms, however, it is a standstill agreement: 'I wish we could
go further but that was the quid pro quo,' says Sorrell. Nonetheless,
Asatsu was a coup: it's critical to have a presence in the world's
second-largest advertising market though western agencies were
traditionally unable to build businesses there. Until recession opened
the door, equity was rarely offered to 'gaijin' or foreigners.
Even in these days of digital communications, Sorrell contends that
geographical coverage will continue to be crucial: 'By the year 2014, 65
per cent of the world's population will be in the Asia-Pacific region.
So some of the markets that appear unprofitable now will become more
important,' he says.
What will WPP look like in ten years and will it, as some suggest, move
its HQ from Mayfair's Farm Street to New York in order to reap the
benefits of a full US listing? On the second point, Sorrell is
dismissive. WPP already has a listing on Nasdaq so there is no reason
(tax advantages of remaining in London aside) why it cannot have a full
listing on the New York stock exchange as well. 'No, we're not going to
move WPP to New York. There are about 100 people at WPP, 60 in London,
40 in New York and a few in Sao Paulo and Hong Kong.'
Sorrell's plan for WPP in ten years necessitates action: 'I hope that
instead of being 40 per cent European, 40 per cent US and 20 per cent
Asia Pacific, the revenue split will be a third each way. I don't think
the web will be a vastly more important part of our business than now
but I'd hope that our non-advertising businesses will account for a
greater proportion. And I'd like our research businesses to become more
important because, like it or not, quantitative decision-making makes
While further forays into TV programme development are possible, he
dismisses the idea of venturing into Hollywood and the glitzy fields of
rights buying or talent management. 'Talent's a risky business,' he
says. 'I used to work for Mark McCormack, and he has a monopoly
In an industry obsessed by size, it's refreshing to hear Sorrell wax
philosophical about ceding the number one advertising group spot to
Omnicom last year. 'I think I've grown up and calmed down a bit,' says
the 54-year-old who's just signed up for a further five years after 14
years at the helm of WPP. This should be taken as relative; he's still
one of the most famous workaholics on the planet.
'Maybe I've grown up as a result of what we went through in the early
1990s,' he muses. Christmas 1991 marked the nadir of Sorrell's fortunes;
thanks to the recession and the realisation that he had overpaid for
O&M, WPP shares collapsed to just 26p - as Campaign goes to press they
In any case, Sorrell argues that the issue is not size (unless, one
suspects, he is talking about his enormous personal incentive package):
'It's can we be the finest in the industry, not the biggest,' he says.
'And when you're number one there's only one way to go, after all.'
- This interview ran in September 1999. WPP acquired Y&R the following
year in a dollars 4.7 billion deal, one of the largest in advertising
history. Conquest was rebranded as Red Cell in February this year.