Workaholic Sir Martin Sorrell once swore that he wouldn’t leave advertising giant WPP “until they carry me out of the glue factory”.
Little wonder, then, that he is said to be “fed up and p----- off” after resigning on Saturday night from the media empire that he created. Barely a week back from a rare break, when he visited Venice and Rome for his wedding anniversary, and his run as the longest serving CEO of a FTSE 100 firm has unceremoniously ended.
The circumstances surrounding his departure are not what one of the world’s most successful businessmen would have wanted. His three decades in charge of the £20bn company have ended following an investigation into alleged misconduct, and at a time when the industry is facing a whole swathe of fresh challenges.
Although he has always denied wrongdoing, and WPP said the allegations were not “material”, the probe came at a difficult time. Investors have been increasingly questioning the group’s strategy amid steep falls in advertising spend as digital giants such as Facebook and Google push further into the market.
Before the investigation emerged, shareholders had told The Daily Telegraph that they would be questioning whether Sorrell was the best person for the job at the firm’s annual general meeting in June. The concern was that the 73-year-old was out of touch and unable to lead it through the next era.
“Martin is one of the greatest phenomena in the history of the media business,” said advertising boss Johnny Hornby, who runs London agency The&Partnership. “Had he stayed, I think he still had the energy and the intellectual capability to have transformed this business. But the job now needs to be done very differently [to previous years].”
Sorrell has transformed the business from a tiny wire basket manufacturer that he acquired in the Eighties into an international giant, However, Mr Hornby said WPP’s next boss should not feel inclined to emulate his leadership style, or reputation as an economic guru, as they will face an entirely different set of problems.
“The person that does this does not need to be a leading economist, you don’t need to be a major figure at Davos, and you don’t need to be at every conference in the global economy,” he said. “You need to be with your clients. The job will be to reconfigure this quickly, not to be a spokesman on the world’s stage on what’s happening on the world economy. Martin was amazing at that but that time has gone.”
The new chief executive will be under intense pressure to revive a company that cut revenue forecasts three times last year. Its shares have been hammered by drops in advertising spend, as digital rivals increase their dominance. WPP’s biggest client Ford, which accounts for 4pc of revenues, is halfway through an agency review aimed at cutting costs, with big corporates including HSBC, Sky, Shell, and Mars also having another look at their agency roster.
The next boss will need to decide whether or not the company, which has grown through a slew of acquisitions over the years, should be broken up or consolidated into a smaller number of groups.
“It’s the end of an era, not just in terms of Martin, but a period of time where the world’s advertising and media agencies were all being snapped up by Omnicom, Publicis and Martin [WPP] – those days are gone,” continued Hornby. “There are parts of the business where it might make sense to sell off, the most obvious one being research. The structure will have to be very different going forward, I don’t see the relevance of creative and media agencies being separate. If they don’t transform they might get broken up, so what somebody needs to do is restructure the organisation radically to make the case for why these assets are better together than separate. Creative and media, with digital, if you put them together, is the way forward.”
WPP 1-year share price
But advisers warn that any major restructure will come with problems of its own. “Those currently doing well in adland are the nimble, independent agencies. Yet WPP can’t behave like an independent overnight,” said Julie Langley, a partner at Results International. “It’s an incredibly complex structure with a significant number of acquired companies that are working through their earn out at any given time. Trying to restructure a business like WPP when you are still managing post-merger integrations and earn outs would be difficult and expensive.”
Others in the industry played down the likelihood of WPP imploding. Executives Mark Read and Andrew Scott, who have been handed the temporary running of the business, are capable of steadying the ship, they say.
Hornby called the pair a “formidable combination” and the most sensible internal candidates to take over the running of the business, with another senior industry source saying Read’s digital background should make him top of a shortlist of permanent replacements.
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“The company is in very safe hands – Mark and Andrew understand the business and how it operates. There are 150 senior managers at WPP who know exactly what they’re doing,” adds Enders. “Martin long ago stopped pressing the peddles.”
Indeed, those in the industry say the real leaders are the heads of the companies within WPP – they are the ones involved in the day-to-day running of the organisations. “They drive the work – Martin is like the god in the clouds you don’t see,” says one executive. “He isn’t a Don Draper as he isn’t really involved in the work. It will be interesting to see what happens when the puppet master isn’t there, and if he still attends the Cannes [advertising] festival in June.”
However Sorrell’s contacts book and unique people skills cannot be underestimated. “The key role he had, which is so important, is interfacing with top clients,” Enders said. “Finding someone who is a charisma machine in the same way Martin is will be tough. It may be that an external person is a sexier choice for the City. Martin is a very big name. There is no other Sir Martin Sorrell in the world.”