Staff Reporters
Apr 16, 2018

APAC leaders assess Sorrell's past and future impact

Martin Sorrell reshaped the industry in Asia. His departure from WPP may reshape it further.

APAC leaders assess Sorrell's past and future impact

APAC industry observers contacted by Campaign have no trouble acknowledging the magnitude of the impact Sir Martin Sorrell made on the region in the years leading up to his abruptly announced departure from the CEO post at WPP. As one might expect, they differ on whether that impact was positive or negative overall, and on what will happen to WPP—and even the holding-company model—next.

"Sir Martin did more for Asia and its growth than any other holding company leader," said Greg Paull, principal with R3. "One of his legacies was building a greater than $1 billion business in China and a sizeable India business while other groups were floundering."

Sorrell's trademark for Asia success was staff retention and a constant investment in the WPP, Ogilvy, GroupM and other brands, Paull added.

A long-serving WPP employee, Neil Drewitt, who served as media and digital director of Ogilvy & Mather Korea from 1994 to 2002, argued that Sorrell's level of involvement in Asia-Pacific over the years meant "its formidable Asia-Pacific footprint would persist" even if it were to be broken up.

"Sorrell recognised earlier than most of his peers that the future growth in global advertising and PR revenue would come from emerging markets, and in particular from China and India," Drewitt said. "So in some respects Asia-Pacific is the jewel in the crown of WPP's operations as trading conditions become more difficult and less profitable in North America and Europe."  

Longtime APAC industry figure Ken Mandel, most recently of Publicis Media, agreed that Sorrell had a tremendous impact in Asia, and noted that Sorrell also made his mark on many individuals, including himself. Mandel also praised Sorrell's early recognition of the importance of digital media.

"He leaves big shoes to fill, and I suspect it will be more difficult than it was at Publicis Groupe to find the most suitable replacement," Paull said.

“We can continue to talk about things like creativity and so forth, but bigger-picture thinkers don’t exist and [his resignation] is a real loss for the industry."
—Barry Lustig, Cormorant Group

However, some observers feel that the impending changes will be more momentous than a new name on the CEO door at WPP.

Barry Lustig, managing partner of Cormorant Group, said a breakup of WPP now seems inevitable. He attributed Sorrell’s departure to the loss of investor confidence. “If the company was financially healthy, [the misconduct allegation] would be a non-issue,” he said. “I think people are asking a lot of the wrong questions about succession. For me the question is how will the business be merged and divided.”

WPP is far from being the only holding company to be struggling financially, and Lustig said he envisaged this as the start of the dissolution of other groups. In the same way that Sorrell shaped the advertising sector as it exists today, he suggested, so his departure will also lead to a reshaping of it. He said this need not be negative, but noted that the industry risked becoming “too myopic” with Sorrell gone.

Tom Doctoroff, chief cultural insights officer at Prophet, referred Campaign to a LinkedIn post he penned in reaction to the news over the weekend. While he acknowledged Sorrell's influence, Doctoroff, formerly regional head for J Walter Thompson, decried that large agencies have been "denuded and demeaned" for the last 20 years, and minced no words in arguing that the holding company business model has failed.

"Sir Martin Sorrell's swift and sad downfall is a flashing red light for the entire communications industry," Doctoroff wrote. "His shocking professional demise is de facto proof that investors and clients have lost confidence in the ability of holding companies to generate growth for brands."

Holding companies have never clearly defined their value proposition, he added. WPP remains "an aggregation of hundreds of P&L centres, each reaching for its own small piece of sky," Doctoroff wrote, while Sorrell's much-lauded 'horizontality' resulted in "further silofication, not integrated solutions that elevate brands".

"He had no patience for not doing the right thing immediately. WPP was clearly his company, and he was never going to beat around the bush or keep executive secrets. He was only about getting stuff done and moving forward at speed."
—Ken Mandel

In a transition sure to be "painfully bloody", WPP will need to aggressively redeploy its assets, Doctoroff said, adding that the stakes are high.

"The industry faces an existential threat," he concluded. "Either it fundamentally reconfigures its operating model to refocus on ideas for growth, or it will be picked apart by investment scavengers. Marcomms will be under siege from 21st century barbarians at the gates."

Macro and micro impact

If the survival of the machine Sorrell built is in question, along with at least some of his personal reputation given the accusations that brought about his downfall, people who worked with him are unequivocal about the impact he made on both the macro and micro levels.

“There is no one in the profession who has the kind of global view that he has,” said Lustig. “We can continue to talk about things like creativity and so forth, but bigger-picture thinkers don’t exist and [his resignation] is a real loss for the industry. There is no one else whose opinion is sought after [to such an extent] outside of [advertising’s] specific areas of expertise.”

Mandel, who crossed paths with Sorrell when WPP acquired Cordiant, which owned both Bates and XM, recounted Sorrell's open-ear policy and no-nonsense demeanour. Sorrell met personally to get Mandel's thoughts on XM, which Mandel was running at the time of the acquistion.  

"Sir Martin Sorrell's swift and sad downfall is a flashing red light for the entire communications industry. His shocking professional demise is de facto proof that investors and clients have lost confidence in the ability of holding companies to generate growth for brands."
—Tom Doctoroff, Prophet

Mandel said he and the other managers of XM were considering a management buyout at the time. "So I bluntly asked Sir Martin if we could consider this, as this is what I and the team wanted," Mandel said. "After hearing this, Sir Martin looked at me for while, then told me, firmly but nicely, that he buys—he does not sell—agencies. And if there were any issues I had with XM not growing as fast as it could under our current corporate structure, he would fix it." 

Mandel soon learned that Sorrell was not kidding about cutting through barriers. After Mandel explained what he saw as XM's issues to a patient Sorrell in a private setting, Sorrell promptly repeated Mandel's comments in a large meeting that included Mandel's bosses. "I was shocked that he did what he did, but he was right, and he had no patience for not doing the right thing immediately," Mandel recounted. "WPP was clearly his company, and he was never going to beat around the bush or keep executive secrets. He was only about getting stuff done and moving forward at speed."

After surviving that meeting and the weeks, months and years that followed, Mandel came to learn that Sorrell remained truly interested in hearing from him. "Amazingly, whenever I had an idea about my business or WPP that I wanted to share with Sir Martin, I could simply write to him and he would either write back to say it was a lousy idea or quickly set up a 30-minute call with a wider group to discuss it," Mandel said. While some ideas (such as acquiring aQuantive before Microsoft did) were not adopted, some (such as acquiring 24/7 Media) were, Mandel added.

"Sir Martin always had time for a good idea and quickly told you when he thought it was a bad one," Mandel said. "Later when I left WPP I stayed in touch with Sir Martin and he was always helpful, but never held his tongue." 

"Sir Martin did more for Asia and its growth than any other holding company leader. One of his legacies was building a greater than $1 billion business in China and a sizeable India business while other groups were floundering."
—Greg Paull, R3

While not sharing the view that Sorrell's departure means the end of WPP or holding companies in general, Mandel agreed change is afoot. However, Mandel feels Sorrell's influence will continue to serve the company he built. 

"There are no silver bullets for the advertising business going forward—it is all hard work from here on in," Mandel said. "Andrew Scott and Mark Read, the executives taking over, have a gazillion more 'Martin stories' than I or anyone does, and in each one of those stories there are very valuable lessons—albeit sometimes painful ones—that will sustain WPP for years if not decades to come."

WPP milestones

  • 1985: Martin Sorrell buys a controlling stake in Wire & Plastic Products for $676,000
  • 1987: WPP makes advertising history with the hostile takeover of JWT for $566 million
  • 1989: WPP acquires Ogilvy Group for $864 million, a year after listing on the NASDAQ
  • 1989: WPP sells JWT property in Tokyo at the peak of the market for a record $205 million
  • 1989: First WPP board meeting held in China at the Pearl River Hotel in Guangzhou
  • 1997: Mindshare launches in Hong Kong; WPP acquires 37 per cent stake in Batey Ads
  • 1998: WPP takes 20 per cent stake in Asatsu-DK, Japan's third-largest agency
  • 2000: WPP acquires Young & Rubicam Group for $4.6 billion
  • 2003: WPP acquires Cordiant; relaunches Bates as standalone Asian agency brand, Bates 141
  • 2003: GroupM is formed; WPP wins landmark global HSBC account in pitch against Omnicom
  • 2005: WPP acquires Grey Global Group
  • 2006: Citic Guoan splits from Grey and WPP in China after a 14-year partnership
  • 2008: WPP acquires Agenda, expanding Wunderman's Asia presences by 40 per cent
  • 2011: WPP overtakes Omnicom as biggest marketing group
  • 2012: WPP acquires AKQA
  • 2015: GroupM acquires Essence
  • 2017: WPP merges MEC and Maxus, forming Wavemaker.
  • 2017: After a fractious back and forth, WPP agrees to sell its ADK stake to Bain Capital
  • 2018: WPP merges Cohn & Wolfe, Burson-Marsteller

David Blecken, Matthew Miller and Olivia Parker contributed reporting to this article.

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