The global advertising agency oft described as a one-man show – WPP – has just lost that one man.
Over the weekend, Martin Sorrell, WPP’s founder, chief executive, driving force for 33 years, Britain’s highest-paid executive and ultimate corporate schmoozer, resigned from the company.
It was not the way the feisty hard-charging 73-year-old wanted to go. He stepped down days ahead of the release of a report, commissioned by the board of directors, into his alleged personal misconduct. Presumably, Sir Martin – he was knighted in 2000 by Queen Elizabeth – would have hung in if he suspected the report would clear his name. He denies any wrongdoing.
His long, emotional farewell note to the 200,000 employees of WPP, the world’s top advertising and marketing agency and main competitor to Omnicom and Publicis, left the impression he will be lost without his beloved company. “As a founder, I can say that WPP is not just a matter of life or death. It was, is and will be more important than that,” he wrote.
Mr. Sorrell said he resigned because the “disruption” of the investigation “is simply putting too much unnecessary pressure on the business.” WPP’s chairman, Roberto Quarta, has stepped in as executive chairman while an internal and external search for a new boss is held.
No details of Mr. Sorrell’s alleged offences have been released. All that is publicly known is that a whistleblower made allegations about his misuse of company assets. WPP’s board has finished the investigation and has said the amounts involved were not material.
Replacing Mr. Sorrell will not be easy, all the more so since he had given the board, his employees and his clients the impression that he would play the ad game forever. While WPP has a succession plan, there is no obvious successor. Certainly, no FTSE-100 company was identified as closely with its CEO as WPP.
In a lengthy interview in WPP’s offices in Mayfair, London, in 2015, Mr. Sorrell told me that he had no intention of retiring even though he was at that time well past the normal retirement age for a British executive. “I’ll carry on as long as they’ll have me,” he said. “My son told a Financial Times reporter that I will never retire, that I’ll be found [dead] on seat 1A of the BA flight from London to Beijing. That may be not be far from the truth.”
Mr. Sorrell has a reputation as a workhaholic – his first wife, Sandra Finestone, cited his obsession with work for the breakdown of their marriage in 2003 (his second wife is the Italian Cristiana Falcone, a former journalist who became senior adviser to the executive chairman of the World Economic Forum, better known as Davos).
WPP covers about 400 advertising, marketing, research, data, PR, branding and media businesses in 3,000 offices in 112 countries.
The biggies in the empire include J. Walter Thompson, Ogilvy & Mather, Grey, Burson-Marsteller, Hill+Knowlton, GroupM, Kantar, Xaxis, Buchanan and 24/7 Real Media. In Canada, where WPP has almost 3,000 employees, the operating companies include John St., Taxi and Twist Image.
There is no doubt that Mr. Sorrell was a bit of a control freak, too. One of his nicknames in London was “Napoleon,” for his commanding power, sheer force of personality and, not incidentally, his diminutive size (he once launched a libel suit against two former employees for allegedly labelling him and a female executive “the mad dwarf and the nympho schizo”).
Mr. Sorrell had so much clout and was such a details man that his WPP roles included working as his own communications team. When I met him two years ago, he came in alone – no PR man or woman in sight – which is unheard of among FTSE-100 and S&P 500 executives. He often returned e-mails within minutes to anyone who sought his attention. On Sunday, when I requested an interview, he e-mailed me back immediately with a polite refusal (he was still using a WPP e-mail, suggesting the company was gracious about his exit).
Mr. Sorrell was born in London, the son of a Jewish immigrant and owner of electrical shops whose family came from what is now Ukraine. He was educated at Cambridge and Harvard, where he earned an MBA, and became the finance boss of the famous Saatchi & Saatchi ad agency. He didn’t strike out on his own until the age of 40, when he decided to turn WPP, then Wire and Plastic Products, from a lowly maker of wire shopping baskets into a global advertising business.
He did so by embracing the then-fashionable business model: Buy big, buy often and buy everywhere. The aggressive formula did not always make him friends. In 1989, when WPP launched a bid for Madison Avenue’s Ogilvy Group, David Ogilvy, known as the “father of advertising” called Mr. Sorrell “an odious little shit,” an insult that seemed to bother him not one bit.
WPP is not just a matter of life or death. It was, is and will be more important than that.— Martin Sorrell
The rapid expansion worked and WPP rose to the top of the global advertising heap. In 2015, he was awarded a jaw-dropping pay package of £70.4-million ($126-million at current exchange rates). At one point last year, the company, after bouncing back somewhat, but only somewhat, from the postcrisis advertising slump, was valued at more than £20-billion (about $36-billion). But its been downhill since then. In the past year, the shares have fallen by almost one-third.
WPP’s business model is under pressure and Mr. Sorrell has made no secret that the ad market is changing rapidly, hurting some of WPP’s businesses. In his 2015 interview with me, he said the austerity mindset was alive and well among the traditional big advertisers, such as Procter & Gamble. “I think the Lehman collapse actually had more impact on corporations than consumers because they were staring into the abyss in September, 2008,” he said. “The world almost came to an end, which has made corporations very conservative. … Companies don’t want to take risks. They’re very focused on costs, not the top line.”
Meanwhile, Google and Facebook are doing their bit to damage the traditional advertising model. Their enormous reach allows advertisers to connect directly with billions of people.
Some analysts think WPP faces a shakeup in the post-Sorrell era and that some of the WPP companies, which often compete with one another, will be sold. Reportedly, buyout firms are already circling WPP with an eye to picking off some of the best-known companies and giving them the private-equity turnaround treatment.
WPP may have seen its best days as social media picks away at its business. And there is no guarantee that the next CEO will have the mental bandwidth and energy to manage hundreds of WPP companies around the globe. With Mr. Sorrell’s departure, the Mad Men era seems truly over.