Martin Sorrell, founder and executive chairman of S4 Capital, has said that WPP may be “too far gone” for incoming chief executive Cindy Rose to have the effect needed to turn around the business.
The founder and former CEO of WPP, who has previously advocated for the sale of the holding company’s media arm WPP Media (then known as Group M), again raised the question of whether or not WPP may be “better off” breaking down its units to sell them off, criticising outgoing CEO Mark Read’s leadership over the past seven years.
Speaking to Campaign, he said: “Cindy Rose’s operating experience at Disney, Vodafone and Microsoft may be stellar and she may be very talented, but the question is whether the business is too far gone as a result of the approach of the last seven years and would be better off being dismembered into its still standing constituent parts or consolidated elsewhere.”
The market cap of rival Publicis is now four times the size of WPP and WPP issued a profit warning for Q2, revising its full year revenue forecast to a decline of between 3% and 5%.
Sorrell quipped: “I’m sure John Wren [the CEO of Omnicom], with 20:20 hindsight, would have preferred to acquire WPP rather than IPG. In any event, the jury is out.”
Primarily, Sorrell added, WPP “needs leadership, a new strategy and a clear structure” to rival the “clear strategy around digital, data and media and a country-led structure”, which, according to him, Publicis has.
Rose, he continued, fits the criteria sought by WPP chairman Philip Jansen, but, he noted, she will have to “be located in, and 24/7 laser-focused on, the US, undoubtedly the centre of the client world and where WPP people are probably most demoralised”.
The US was among the first of WPP’s markets to face job cuts as part of the restructure of Group M and employees were disgruntled earlier this year by Read’s return-to-office mandate.
Sorrell expressed scepticism over agencies’ ability to build software-as-a-service type businesses, as WPP is attempting to do with Open, in competition with companies like Adobe, which are already dedicated to such a set-up.
He also pointed to client and talent losses as the result of the "collapse" of brands, including Wunderman, J Walter Thompson and Young & Rubicam, as a cause for concern.
He said: “WPP has spent over £1.5bn over the last five years below the headline operating profit line on mostly cash restructuring charges and built up multiple levels of overhead at group, sub-group and company levels.
“Under the guise of simplification, the leadership has collapsed storied brands such as J Walter Thompson, Young & Rubicam, Wunderman, Grey, Hill&Knowlton, losing not only many talented leaders, but clients as a result too.”
WPP has been approached for comment.
Analysts at Barclays and Morgan Stanley reacted positively to Rose's appointment after WPP announced the news on July 10. However, they flagged up her lack of experience in capital markets and within ad agencies.
Jansen praised Read for his “tireless commitment” and “progress he has made to modernise, simplify and transform the company over the last seven years as CEO” in the statement to the stock market about Rose’s appointment.
She was also optimistic about the agency group's future: “WPP is a company I know and love — not only from my six years on the board [as a WPP non-executive director] but as a client and partner for many years before that — and I couldn't be happier or more excited to be appointed as CEO.”
Rose added, “There are so many opportunities ahead for WPP. We have and continue to build market-leading AI capabilities, alongside an unrivalled reputation for creative excellence and a pre-eminent client list. WPP has the most brilliant, talented, creative people, and I can't wait to write the company's next chapter together.”
