Sor­rell can be re­placed at WPP, but only by an out­sider

The Daily Telegraph - Business - - Business/Comment - Matthew Lynn

Ir­re­place­able is an over-used word in busi­ness, as in most other walks of life. In truth, most of us, no mat­ter how tal­ented or hard work­ing we might be, can usu­ally be sub­sti­tuted by some­one just as good with only a lit­tle ef­fort. But if any­one mer­ited that ad­jec­tive in Bri­tish in­dus­try, it was surely Sir Mar­tin Sor­rell. Af­ter three decades of build­ing the WPP ad­ver­tis­ing, pub­lic re­la­tions and mar­ket­ing em­pire up from noth­ing, he had be­come the glue that held the whole thing to­gether.

With Sir Mar­tin’s ig­no­min­ious de­par­ture over the week­end, the chal­lenge fac­ing his suc­ces­sor will be a huge one. Not only will they have to fill an enor­mous pair of shoes, but they will have to rein­vent a busi­ness that looks past its sell-by date.

No one ex­pected Sir Mar­tin’s three-decade reign at WPP to end so sud­denly, or in quite such painful cir­cum­stances. Sure, the share price has been under pres­sure, drop­ping from £17 to £11 in the last year. And yet, once al­le­ga­tions emerged about his per­sonal use of com­pany funds, the board clearly de­cided it had had enough.

In a terse state­ment late on Satur­day night, Sor­rell an­nounced his res­ig­na­tion. Roberto Quarta, the chair­man, is tak­ing over day-to-day con­trol for now, and the search is al­ready under way for a long-term suc­ces­sor.

The trouble is, WPP was very much Sir Mar­tin’s per­sonal cre­ation. Af­ter leav­ing Saatchi & Saatchi, where he had been fi­nance di­rec­tor, he took con­trol of a tiny shell busi­ness and stitched to­gether the world’s big­gest mar­ket­ing con­glom­er­ate, deal by deal. With 400 agen­cies and 200,000 staff across 112 coun­tries, it was a sprawl­ing em­pire, and of­ten the only real thing that linked them all up was that Sor­rell had ac­quired each busi­ness.

With a foren­sic at­ten­tion to de­tail, one of the best con­tacts books in the world, and a re­lent­less ca­pac­ity for hard work, Sor­rell man­aged to make the whole thing work. But it will be very hard for any­one else to per­form the same alchemy.

Even worse, its busi­ness model looks in­creas­ingly an­ti­quated. WPP was cre­ated in the era when huge multi­na­tional con­glom­er­ates built global brands us­ing mass me­dia to so­lid­ify their lock on con­sumers. Its agen­cies were the ex­perts in that, and could charge hand­somely for de­liv­er­ing the sales. And yet, that world is fast dis­ap­pear­ing. Tra­di­tional com­mer­cials don’t have much im­pact any more – no one ever watched an ad on Net­flix – and need to be re­placed by so­cial me­dia cam­paigns that are far more lo­calised, and of­ten cre­ated in-house. At the same time, even the brands are chang­ing – the rise of ar­ti­san, spe­cial­ist prod­ucts means that there are far fewer mega-sell­ing things than there used to be. Mass mar­kets have been re­placed by end­less niche ones, but they are far harder for a global con­glom­er­ate like WPP to man­age.

The re­sult? The new chief ex­ec­u­tive will not only have to re­place Sor­rell’s per­sonal day-to-day man­age­ment, and repli­cate his in­ti­mate knowl­edge of ev­ery unit, they will have to rein­vent the com­pany at the same time.

It is a big chal­lenge. So where should WPP’s board start? There are three things to pri­ori­tise.

First, bring in an out­sider. There is al­ready lots of spec­u­la­tion about pos­si­ble suc­ces­sors. Mark Read, the head of its Wun­der­man unit, has al­ready been ap­pointed joint chief op­er­at­ing of­fi­cer along­side An­drew Scott. Those two men look like the front-run­ners, and within its 400 units there are plenty of big per­son­al­i­ties who will no doubt have spent Sun­day think­ing about throw­ing their hat into the ring. It might sound tough, given how well qual­i­fied some of them are, but the board should ig­nore all of them.

At this point in its his­tory, WPP needs an out­sider. Only some­one from a dif­fer­ent back­ground can bring the fresh eyes, and the new ideas, that the busi­ness now des­per­ately needs. And only a clean pair of hands can re­main neu­tral be­tween its com­pet­ing fief­doms.

Next, it needs to be slimmed down. An auc­tion of its units might well yield a lot of cash, and it’s pos­si­ble a bid might emerge. That would be a shame, be­cause there are, as Sor­rell al­ways in­sisted, gen­uine syn­er­gies be­tween its dif­fer­ent units. There is a big dif­fer­ence be­tween a break-up and a ra­tio­nal­i­sa­tion, how­ever, and it is hard to es­cape the sus­pi­cion that Sir Mar­tin bought a lot of com­pa­nies sim­ply be­cause he liked do­ing a deal. Right now, WPP has too many busi­nesses. Many can be sold off, leav­ing a more man­age­able core.

Fi­nally, it should move ag­gres­sively into con­tent. The world of mass me­dia that it was cre­ated for is not go­ing to come back. In­creas­ingly, mar­ke­teers will have to em­bed mes­sages into the con­tent it­self, or into so­cial me­dia feeds. That would be a lot eas­ier if they are in­volved in the cre­at­ing the things that peo­ple are watch­ing or lis­ten­ing to. WPP has al­ready in­vested in a range of con­tent com­pa­nies, such as 88ris­ing, but as the lines be­tween mar­ket­ing and me­dia are in­creas­ingly blurred, it should make a big move into the con­tent it­self. How about buy­ing a stake in Spo­tify, for ex­am­ple, now that the com­pany is listed? Or tak­ing stakes in sports teams so that logo and spon­sor­ship deals are under its con­trol? That will take courage and money, and po­ten­tially a lot of both.

WPP should still have plenty to look ahead to. There are still huge brands out there, and they need to find a way of sell­ing their prod­ucts glob­ally. In­deed, as mar­kets get more frag­mented, and con­sumers more flighty, there may well be even more of a role for a global mar­ket­ing con­glom­er­ate than there has been be­fore. But af­ter be­ing run by the same per­son for three decades, the com­pany needs rad­i­cal rein­ven­tion. Steady­ing the ship, and keep­ing clients on board, will be fine for the next few months. But be­yond that the new CEO will have to be as bold and am­bi­tious as Sor­rell him­self was 30 years ago if the busi­ness is to have a real fu­ture ahead of it.

‘The new CEO will have to be as bold and am­bi­tious as Sor­rell him­self ’

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