WPP’s Sorrell a Reluctant King of Ad World
Martin Sorrell insists that he really doesn’t want to wear the crown the advertising press keeps trying to place on his head: king of the ad world.
Well, his British advertising holding company, WPP Group, was recently anointed the world’s largest agency group by the American and British trade publications Advertising Age and Campaign. To achieve that title, it surpassed troubled Saatchi & Saatchi Co. by reporting 1989 gross income of $2.4 billion and billings of $16.05 billion.
But Sorrell, in an interview before a speech to the American Assn. of Advertising Agencies in Palm Desert, said his goal is not to be a big shot of the ad world.
“Maybe a little shot, but not a big shot,” said Sorrell, who never created an ad but who masterminded his company’s purchases over the past two years of the giant American ad firms J. Walter Thompson and Ogilvy & Mather. “What I’d like to be is successful. If that’s an indictment, so be it.”
Few can argue his successes. The 45-year-old executive is generally credited with vastly improving the performances of both Thompson and Ogilvy by ordering numerous cost-cutting measures. Profit margins at both agencies are now a respectable 10% or so, after falling as low as 4% at Thompson prior to his purchase.
The real problem Sorrell faces over the next few years is figuring out how to continue growing without upsetting clients or losing control of that growth, as some say rival Saatchi & Saatchi appears to have done.
“You can never stop growing,” said Sorrell. “Our clients keep becoming larger in scope. So we have to be in a position to have our resources available to them as they expand.”
But unlike what he calls the “quantitative” growth at Saatchi & Saatchi, where Sorrell was formely director of finance, he says the growth at WPP has been “qualitative.”
Recent financial figures seem to bear that out.
Last week WPP posted an 86% jump in pretax profits for 1989, compared to the year before. In comparison, the two brothers who founded Saatchi & Saatchi agreed earlier this week to slash their annual $1-million salaries by one-third. They also revealed that the company’s pretax profits plunged to $34.8 million in 1989, compared to $220 million the year before.
Sorrell denies taking any special pleasure in seeing his former bosses struggling. “Saatchi-bashing has become a big sport in the past few months. That’s a little unfair. They’ve been in business for 20 years, and they’ve had one bad year, so suddenly everybody’s jumping all over them.”
“All businesses have their difficulties,” said Sorrell. “You can learn from your own mistakes better than you can learn from those made by others.”
So even if growth has spelled trouble for Saatchi, Sorrell insists that will not influence WPP’s continued growth plans. “Nobody wants to work for a company that doesn’t grow,” he said.
Still, Sorrell isn’t projecting any more bombshell announcements of agency purchases by WPP over the next year. “I don’t think you’ll be startled by anything we do,” he said. In particular, he said, he wants to focus on “geographically expanding” WPP’s strategic marketing services--such as graphics and design--in Europe and Asia.
Also, expansion of WPP into the entertainment industry is something Sorrell is considering. “A minority position in some TV station doesn’t make bad sense,” said Sorrell. “For the sake of our clients, it’s important that we understand the dynamics of TV. But don’t look for anything like WPP going Hollywood.”
Most Sorrell watchers, however, have learned to expect the unexpected from Sorrell.
And some analysts point out that despite all of Sorrell’s strategic purchases in recent years, WPP’s stock is hardly the darling of the market.
“The key is to watch what he does and not what he says,” said Alan Gottesman, an analyst at Paine Webber. “Martin is an incredible opportunist.”
Sorrell is also a realist: “When people come to me and tell me they have good news and they have bad news, I say, ‘Forget about the good news, let’s hear the bad news.’ ”
Even those who don’t approve of all of Sorrell’s empire-building and cost-cutting tactics sometimes admit they admire the guy.
“He’s a terrific competitor who has made some daring moves,” said Alexander S. Kroll, chairman of Young & Rubicam, one of the largest ad firms in America. “He makes many of us get out of bed a little earlier in the morning.”
Sorrell also has vastly changed the lives of many executives at Thompson and Ogilvy. When Sorrell took over the agencies he eventually brought in new leaders who were told to close unprofitable branches, sell real estate and cut staff. He also ordered daily cash reports from the agencies.
“Presumably, you like to know what’s in your bank account,” explained Sorrell. “That’s what any responsible company does.”
Some of those who work for Sorrell say his purchase of their agency was like a necessary slap in the face. “If Martin had never acquired Thompson, we could probably have kept plugging along in the same slow manner,” said James K. Agnew, general manager of Thompson’s Los Angeles office. “He was the catalyst for all the changes. It was like tossing a penny in a lake and watching the ripples. He tossed the penny that caused all the ripples.”
It isn’t always just ripples that Sorrell leaves behind. Sometimes it’s more like tidal waves.
David Ogilvy, the 77-year-old founder of Ogilvy & Mather, called Sorrell an “odious little jerk” when he first heard about Sorrell’s bid to buy Ogilvy. But Ogilvy has since been named a director and non-executive chairman at WPP.
Sorrell recalls later commenting to Ogilvy, “I can’t believe an English gentleman would say anything of that nature.” To that, Ogilvy, who played in a ball game with Sorrell last week in London, said: “You’re absolutely right. What I said was worse.”
