Sell-off or solidification? Industry ponders WPP's Sorrell-less future

Executives predict what's next for WPP.

Will WPP keep its stable of firms together in the post-Martin-Sorrell era or sell many off? And who will step into Sorrell’s formidable shoes to lead the world’s largest holding company?

Questions have swirled around WPP since the sudden resignation of Sorrell, who led the holding company for 33 years, on Saturday. Given Sorrell’s long tenure at WPP’s helm, there’s no consensus among agency leaders or industry observers about who the holding company’s board will hire as CEO or what strategy it will take.

Observers have widely noted that there was no clear plan in place for a single successor for the 73-year-old Sorrell, prompting widespread speculation about whether the board will appoint an insider or an outsider to fill his job. Noting a wide gap between WPP’s board and management, Pivotal Research analyst Brian Wieser says the holding company is likely to pick someone already at the company.

"If I were to make a wager, I would bet they would appoint someone who is an insider. An insider would bring continuity to WPP," he explains. "An outsider would pose more of a risk to business as usual."

Whoever the holding company does settle on, Weiser says the individual could "bring new ideas to the holding company" and "lead the rebound that we think will eventually occur."

In the interim, the board has named Mark Read and Andrew Scott to share COO duties. Read is the global chief executive of Wunderman and former head of digital at WPP, as well as a former management consultant, while Scott is COO of WPP Europe. The duo will report to Roberto Quarta, the company’s chairman turned executive chairman.

Executives who spoke with PRWeek on a not-for-attribution basis say they hope Read gets the nod over an external hire, with some wishing the board had already appointed him to the top position, which would reassure nervous clients and employees.

However, some outside observers argue that a voice from outside WPP is exactly what is needed.

"The holding company can’t maintain the status quo. All they have to do is look at their performance to understand that it needs to restructure across its units and address low-performing assets," says WE Communications president for international Alan VanderMolen. "I would bet large money that they will bring in someone with experience at a big management consultancy and with tech expertise or a background in big tech. Either way, they’ll have to be an expert in the digital media ecosystem."  

VanderMolen muses in a blog post that WPP’s leadership made the mistake of underestimating the impact of "digital disruption" on the industry and will try to rectify that error.

Whether an internal or external candidate wins the job, Ketchum CEO Barri Rafferty says that person could be a fresh voice for WPP and the wider marcomms industry.

"Martin has been a strong voice for our broad industry and provided a vision for where it is going through the eyes of WPP," says Rafferty, adding that one of his last acts, merging Cohn & Wolfe and Burson, was one that will have a major impact on the PR industry.

Another holding company leader notes an executive shakeup will create employment and business opportunities.

"Martin’s departure could well start a game of musical chairs as key execs get moved around and their key lieutenants follow," asserts Next Fifteen CEO Tim Dyson. "In turn, that could see major accounts also go through a shuffle. In short, it could be a very busy year in the marketing world."

Donna Imperato, recently appointed to the CEO role of the merged Burson Cohn & Wolfe, says she is optimistic about the performance of WPP’s PR firms, noting, "Most of WPP is saddened by Martin’s departure, especially those of us who have worked with Martin for many years."

"These are tough times in our industry, and Martin’s departure gives us an opportunity to take a close look at our strategic direction and our structure through a new lens," she says. "We’ve already begun a discussion that makes me feel very optimistic about our future."  

Addition or subtraction?
A number of analysts are predicting that WPP will sell some of its agencies or business units. While not specifically naming PR, Wieser says, "We would not be surprised if some assets were pruned to make the company more manageable." However, he also surmises the holding company could make investments "to more clearly establish a focus in certain areas that are likely to support improved long-term growth trends," such as digital and analytics.

Liberum Capital analyst Ian Whittaker argues in a note that the likelihood of "significant chunks of the business being sold off have dramatically increased" since Sorrell’s resignation. He identifies PR as one of the business units that a new management team could try to unload, as well as its market research unit.

"We suspect WPP’s PR assets could also be put up for sale, although this is less likely than a sale of the data investment unit," Whittaker writes.

However, agency presidents outside of WPP are less convinced there will be a mass sell-off.

Dyson says Sorrell’s exit is the "end of an era" for the "Wal-Mart-style," "bulk-buy approach" to marcomms services, but he still doesn’t see WPP holding a fire sale.  

"The talk of WPP being broken up is being driven by analysts looking to unlock value, but I struggle to see why WPP would actually pursue that strategy. The assets they’d want to sell are the low-growth, aging businesses, and I can’t see them being easily bought," he says.

Instead, Dyson sees a consulting giant such as Accenture swooping in to buy the world’s largest holding company.

"Without the ego challenges this type of big deal usually faces, I could see the WPP board being willing to enter into talks," says Dyson. "If that were to happen, Martin’s departure could well have been the catalyst for a new one-stop-shop form of marketing, one that also embraces consulting."

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