Some of the advertising industry's top analysts say Mark Read looks the best choice to be WPP's chief executive and the board would need to find a "spectacular" alternative.
Read, WPP’s joint chief operating officer, is the internal frontrunner to succeed Sir Martin Sorrell in a race during which few external candidates have emerged.
There is speculation that the board will make a decision by 4 September, when WPP announces half-year results, but the company has indicated only that an announcement is likely during September.
"Almost every investor would regard Mark Read as an excellent successor to Sorrell," Brian Wieser, senior analyst at US firm Pivotal Research Group and one of the leading ad industry observers on Wall Street, said.
"Investors know who he is," Wieser explained, referring to Read’s three-year stint as global chief executive of Wunderman and decade on the WPP board as strategy director.
"If it’s not Mark Read, it’s got to be a spectacular choice that surprises people out of leftfield," Wieser said. "The bar is very high."
One industry source said WPP started with "a very long list" in April and although the board soon eliminated many potential candidates, it has "continued to see people" over the summer.
Several WPP board directors, including executive chairman Roberto Quarta, have private equity experience and observers suggest that the company could be interested in an outsider who has a track record in restructuring.
Wieser said if WPP did appoint a new chief executive who came from outside the ad industry, "it wouldn’t be shocking given what Quarta has said" about the need to overhaul the business after Sorrell’s 32 years in charge.
"If the individual is not a known quantity by the investor community, certainly by the UK investor community, if not by the US investor community, it will take selling," Wieser warned.
WPP 'requires an insider'
Claire Enders, founder of Enders Analysis in the UK, backed Read, 51, to take over as chief executive given his long experience at WPP that dates back to 1989 – bar a seven-year break when he went to business school and ran a dot-com start-up.
Enders said: "I think in the very difficult, unique circumstances [of Sorrell’s abrupt departure], it really requires an insider. Mark has a plan that he’s presented to the board and it’s the only plan I’d proceed with."
It would involve "cost-cutting", "deeper thinking", a "more aggressive" approach and "essentially reducing the number of people in all these companies whose roles overlap", according to Enders.
She expects a "complete change of strategy" and predicts WPP will halt its decades-long approach of using acquisitions – what she described as "buying, buying, buying" – to drive growth.
Enders added that "keeping the company financially safe" and "not taking risks" are priorities for the £16bn group, which has £5bn of debt. "The whole solvency issue is really important to WPP," she said.
The uncertain economic outlook, 10 years after the 2008 financial crash, means "prudence management is going to be the order of the day", she predicted.
Jonathan Helliwell, analyst at Panmure Gordon, a London investment bank, who began covering WPP on the stock market more than 20 years ago, said: "It’s only my view but Mark Read seems like the right guy as far as I can see and I think WPP should get on with it as it’s been dragging on."
Helliwell said the short-term outlook "looks like a long hard slog" as a new leader needs to simplify the group and move it back into revenue growth after Sorrell’s poor final year in charge.
He said selling the research arm Kantar would help to reduce debt but "it doesn’t unlock a treasure chest" in terms of transforming the business.
"WPP is a mature, not growing business, that’s already been run efficiently," he said. "An exciting move would be a headlong merger with a management consultancy group. But barring that, it’s a long, hard slog."
A lack of external candidates?
Observers have suggested there has been a lack of external candidates willing to fill the vacancy left by Sorrell, comparing it to how David Moyes took over as Manchester United manager after Sir Alex Ferguson quit after 26 years.
"I don’t think they’ve found it easy to find many people to take it on," one person who has spoken to the WPP board said.
At least half a dozen people have been linked with the job but few credible names have emerged so far.
Wieser cited speculation that WPP has approached IBM’s David Kenny, Oath’s Tim Armstrong and Google’s Matt Brittin.
Another name to emerge is Philip Jansen, co-chief executive of Worldpay, the mobile payments group, but a person familiar with the WPP search has dismissed this.
Jerry Buhlmann, chief executive of Dentsu Aegis Network, is not thought to be under consideration. He said in July he saw WPP's weakness as an advantage for his group.
One source suggested that some external contenders for chief executive might end up being considered for an alternative role such as non-executive director.
Read has been the frontrunner, ever since he and Andrew Scott were named joint chief operating officers in April after Sorrell quit.
The duo have steadied the ship and distanced themselves from the Sorrell era by announcing that WPP will move out of its Farm Street HQ after 30 years.
There has been no word on internal contenders apart from Read, although Stephen Allan, the global chief executive of MediaCom, has had a strong, recent run, winning adidas and Mars.
A WPP spokesman said the search for a chief executive is a "confidential process" and there is no plan for a wider shake-up of the board's directors.