Sorrell: Remain’s fatal mistake
SIR Martin Sorrell is the formidable, globe-trotting tycoon behind one of the world’s most successful companies, advertising giant WPP. But this weekend he was virtually holding his head in his hands. Sorrell was stunned by the referendum result and scathing about Remain’s campaign – and he has close ties with some of the most senior people in Government including Chancellor George Osborne, who led the economic case for remain.
For Sorrell, the branding and marketing expert, the Remainers made a strategic error which proved fatal.
Delivering what he calls his ‘autopsy’ on the vote, he declares: ‘The Remain campaign’s focus on the economy was a terrible mistake. The fundamental error was to concentrate on the economy at the expense of discussing sovereignty and immigration. This was all about an emotional argument, a referendum is different from a General Election,’ he says.
‘The Remain camp should have talked about sovereignty and immigration. These are difficult issues to talk about, but they should have been tackled head on,’ he says.
Nor was he impressed by David Cameron’s ‘coup’ of bringing President Obama in to the campaign to highlight the dangers of Britain going it alone.
‘There was a huge difference in the attitude of different age groups: young people admired Obama and were happy to listen, older people just didn’t like being told what to do.’
I have known Sorrell for two decades. I have never heard him so shocked. Almost rattled. ‘It’s unbelievable; what a nightmare,’ he declares. Sorrell has built WPP over 40 years into a business which now owns some of the most famous advertising agencies in the world, from J. Walter Thompson to Ogilvy & Mather and with global clients including HSBC, Vodafone, Ford and Coca-Cola.
The company employs 194,000 people – more than twice the numbers of the British Army – in 112 countries and is regarded as a true global bellwether for the world’s economy. He notes TNS, the polling company that is part of WPP, got it right. ‘TNS called it 41 per cent Remain and 43 per cent Leave – but it’s small comfort.’
But he is not sparing of himself either. Unlike so many executives, Sorrell is never afraid of a fight, whether over his own sky-high £70million pay packet – WPP shareholders have done well by him, so success is shared, he says – or over issues he feels strongly about. He was a vocal proponent for Remain.
What does the referendum result say about the public’s attitude to globalisation, the process whereby goods and services and labour can move increasingly easily across borders, the process which the success of his company exemplifies and which the forecast future wealth of the world is predicated on?
‘How do you explain to a car worker who has just lost his job that the car industry is better off because cars can be built more cheaply in China? He’s not better off; he’s lost his job. What you have to do is subsidise, to ease what is painful with more training, more support,’ he says, his pragmatism sounding very at odds with his more idea logic ally minded fellow Tory supporters.
Sorrell is in the communication business: WPP, worth more than £21billion, lives or dies by its ability to reach consumers and influence their behaviour. He is in despair at the failure of the Remain campaign to successfully persuade voters of its merits.
‘We were just talking to ourselves – it was a London bubble, not even a South East England bubble: London was the only bit of the South East that voted Remain. Look at the City, over 75 per cent in favour!’ he says.
He says globalisation’s proponents’ constant emphasis on the benefits of technology – and WPP is itself a major player in the digital space – without addressing its downsides is a serious defect. ‘The implication behind so much said by the tech industry – 3D printing, the web – is that it will lead to jobs, to growth. But I have always been of the view that the rise of tech will reduce jobs,’ he says.
As for his own company which competes for business all over the globe, Sorrell is clear: ‘We will double-down on our growth strategy: we will put renewed focus on fast growth markets including the Brics (Brazil, Russia, India and China) and the Next 11 – like Indonesia and Turkey.
‘We will boost our digital and datadriven operations. And what we call “horizontality” which, ironically is the term we use for working together better!’ he says.
BUT Sorrell is also clear on his own view of the importance of WPP’s own engagement with the leading countries of the European Union. ‘Let’s be clear: 90 per cent of our business is outside the UK. If sterling falls 10 per cent, that means 10 per cent off our market capitalisation, but 90 per cent of our revenue is in foreign currencies which will appreciate against sterling which will lead to higher revenue growth,’ he says. ‘And now we are going to refocus our energy on Germany, France, Spain and Italy, which are among our top ten markets; we have to now that the UK has voted out, we need to work harder to develop our businesses there now.
‘Growth in our head count in the UK is likely to be less than in other key European markets.’
He adds: ‘We have seen slow GDP growth and what we have done is create more of a problem for ourselves. With the pound devalued, inflation might pick up in the UK, investment is likely to be deferred.’ Businesses which still rely on advertisers to a large extent for their income, like commercial broadcaster ITV, have already seen their share prices hammered: ITV’s plunged by more than 20 per cent on Friday, wiping £1.83billion off the value of the company.
Does he detect a glimmer of hope for us? He moots the idea of quitting the EU to renegotiate a better deal to rejoin, as some more cautious Brexiteers have suggested.
‘But we can put on our tin hats, stiffen our upper lips and go out into the world afresh to make the best of it. We might think of Singapore as an example for us, perhaps, when it broke away from Malaysia 50 years ago and it has thrived ever since. I used that analogy for Scotland during that referendum,’ he says.
Which brings him right back to the present with a jolt: ‘A Scottish referendum on the cards, calls for an Irish referendum. The break-up of the United Kingdom, perhaps? Whoever is going to be the next Prime Minister will have a hell of a job – I hope Boris Johnson realises that.’
Now the UK has voted out, we will work harder in Germany, France, Spain and Italy
Whoever is the next PM will have a hell of a job – I hope Boris Johnson realises that...