Steve Barrett on PR: Sorrell legacy lies in the balance

Much of the analyst commentary about WPP post-Sorrell betrays a fundamental lack of understanding about modern marketing and communications.

WPP's board grew tired of Martin Sorrell's founder mentality at a publicly quoted company.
WPP's board grew tired of Martin Sorrell's founder mentality at a publicly quoted company.

Many thousands of words have been written about Martin Sorrell and WPP since the marketing services behemoth’s founder resigned as CEO on Saturday evening.

These include excellent perspectives from Haymarket colleagues including Campaign legend John Tylee, who has forgotten more about advertising than most people know; Campaign’s global EIC Claire Beale; media correspondent Gideon Spanier; and PRWeek UK EIC Danny Rogers.

You can also read what the world’s most famous PR person, Richard Edelman, thinks of Sir Martin’s legacy here – and it’s very complimentary.

Sorrell's legacy depends on your view of a man who established the largest marketing services company in the world from scratch over a 33-year period in which he bestrode the advertising industry.

Some say he brought marketing services into the modern era and helped them to be taken seriously by the financial community, C-suite executives, and politicians - others say he destroyed the essential creativity at the heart of the advertising business. He was also accused of continuing to run the company he founded as a personal fiefdom even when it became a major quoted public enterprise.

The truth as usual is probably somewhere in the middle.

Whatever your view of him, the worlds of marketing and communications will be much duller without his input. He wasn’t just a front man for WPP - he was a much-needed high-profile spokesperson for the whole industry.

Sentiment inside the company he founded and among investors outside it turned against him after a year of terrible financial performance over the past 12 months, which made his legendary exorbitant salary even harder to stomach and emboldened board members to finally reach for their pound of flesh. The company is also facing several reviews among major clients and, like everyone else, is struggling with budgetary belt-tightening among those clients.

His legacy will also hinge on whether details of the inquiry that WPP launched into misuse of company funds and personal misconduct ever emerge into the public domain. WPP said the "allegations do not involve amounts that are material" when Sorrell’s departure was confirmed – whether they are talking about money or some other substance is anybody’s guess.

The Wall Street Journal broke the original story of his suspension due to the personal misconduct and you imagine they would have revealed precise details of the allegations at that point if they felt able to do so. It may be they have the information but don’t yet have sufficient sources to feel comfortable pulling the trigger.

WPP is certainly not making it public after agreeing to say goodbye to their iconic CEO, although there are those in the U.K. lobbying for the holding company to do so, including British political leader Vince Cable, who accuses the network of sweeping the affair under the carpet and lacking transparency. Cable has threatened to use Parliamentary privilege – essentially immunity against being sued – to reveal the misconduct.

But, for now, let’s go with what we know.

Sorrell was always good value from a journalist’s point of view. He provided access and responsiveness sorely lacking from other holding company leaders and senior figures in marketing services.

He usually replied to emails within 20 minutes. Even if the replies could be terse and snarky, he cared enough to give everyone time.

His leadership role in promoting the whole industry, being a go-to source for the financial community, and explaining to the wider population what exactly marketing and communications is and why it is so important should not be understated.

In these times of zero-based budgeting, clients cutting budgets, and skepticism about the effectiveness of marketing and communications, we need more people to take up Sorrell’s mantle in promoting what marketers do.

When I read some of the nonsense spouted this week by so-called experts who are paid to provide in-depth analysis of the industry, it reminds me of last week’s discussion about the cluelessness of senators questioning Facebook CEO Mark Zuckerberg about the intricacies of web advertising and algorithms. The main difference is it is these people’s full-time job to talk intelligently about marketing.

One British analyst went so far as to say WPP is about to get broken up and that this would then lead to the breakup of all the holding companies within 18 months. I get it, they're trying to stimulate deals, but some of this commentary displays a fundamental misunderstanding of the way modern holding companies work, and I just can’t see this happening.

Why would WPP divest its media investment behemoth GroupM? It’s the biggest cash-generating machine in the whole group, but it’s an operation that relies entirely on the collective effect of negotiating big deals at scale with media owners and distributing that buying power throughout the constituent parts of the holding company. As a separate company, its need for being would cease to exist. It just doesn’t make sense.

And while the group’s Kantar research business might be an easier, more self-contained unit to hive off, it again makes little sense to divest such an important function at a time when data and smart insights based on research are so fundamental to all of the activities within the WPP mothership.

WPP has already embarked on a simplification process across the business in the past couple of years, combining the Mark Read-led Wunderman and Possible into a 9,200-strong 200 office operation; merging media agencies MEC and Maxus and expanding its digital Essence unit; and bringing together five of its design and branding agencies at the end of last year.

It would make more sense to simplify and rationalize by combining Wunderman, Kantar, and GroupM’s digital and data assets into a high-performing, high-margin powerhouse than it would to sell off the individual components.

Similarly, WPP’s PR assets have been identified as ripe for hiving off. Again, this fundamentally misunderstands where PR fits in to the overall pie and demonstrates old-fashioned thinking about the discipline.

It’s true that former PR titans Burson-Marsteller and Hill+Knowlton Strategies have struggled to establish a new identity for themselves since younger, harder-charging bucks like Edelman and Weber Shandwick rose to the top of the PR agency pile. WPP merged Burson with Cohn & Wolfe to try to address this.

But holding companies are seeing traction in integrating disciplines and going to clients with a converged offer that provides a one-stop shop across the paid, earned, shared, and owned (PESO) media mix – not by hiving off disciplines. That’s why John Seifert, worldwide chairman and CEO at Ogilvy, has dismantled individual operating companies such as Ogilvy & Mather, Ogilvy One, and Ogilvy PR and is "refounding" the whole agency under an integrated model.

Seifert told PRWeek for our soon-to-be-published Agency Business Report that PR was the best-performing unit across the whole Ogilvy network. "It won a high share of integrated business with other WPP companies and diverse wins across capabilities in the group," he added.

It would be difficult now to even extract the so-called "PR" function out of Ogilvy if it was to be sold off in the way some analysts are suggesting.

And if you look at other holding companies, such as Publicis, they are also prospering by going to market with a "Power of One" structure in which all agency brands still exist but share an operational background and go to market together.

Omnicom has established Omnicom Public Relations Group to combine its PR assets, a Brand Consulting Group to bring its branding and research offerings, a new Specialty Marketing Group to meet growing demand for specialized marketing services, and Omnicom Health Group as a global collective of healthcare communications specialists.

It provides marketing services through a combination of specialized agencies, customized client solutions, and collaborations with other Omnicom network firms.

Holding companies are integrating teams across disciplines, combining their best talent around the world, and constructing offerings that reinvent brands across all consumer touchpoints. They are meshed together vertically and horizontally and it is increasingly difficult to pull the constituent elements apart – deliberately, because that’s what clients want and that’s how the once-very-separate disciplines are evolving.

I can see how certain specialist WPP PR agencies could be sold, such as public affairs shops in Washington, D.C., or tech firms on the West Coast. Maybe WPP alum Mark Penn’s Stagwell Group could be in the market for firms like that. And the tech angle is the only way I could see a holding group such as Next Fifteen getting involved.

Other WPP executives might not have bought into Sorrell’s "horizontality" agenda as much as the former CEO, but there’s little doubt that major clients especially are in the mood to use fewer agencies, not more.

This week we have mainly heard from former Sorrell loyalists within WPP, including newly appointed joint chief operating officers Mark Read and Andrew Scott and Ogilvy’s John Seifert. Much of it has been slightly hagiographic in nature about Sorrell’s legacy. Naturally, it has also sought to dampen speculation about a possible sell-off or breakup of the company.

But there is an executive search brief out there for a new CEO, which is going to include candidates from outside WPP, and the more disapproving voices within the board have likely been keeping their powder dry in the background.

When legendary British soccer manager Alex Ferguson retired in 2013 I interviewed Sorrell and tried to draw an analogy between these titans in their individual fields, with a view to constructing a smart headline linking the two of them.

Sorrell was far too smart to fall for that and soon shut down the line of questioning. He is more of a cricket than soccer fan, but it was poignant that another storied and long-tenured British manager, Arsenal’s Arsene Wenger, also announced he was stepping down this week.

Wenger’s legacy could be punctuated by a win in the Europa League if his team can negotiate two more hurdles in that competition.

Sorrell doesn’t have a non-compete clause so he could be back in some guise to construct a final chapter. But his legacy depends in part on whether someone manages to nail the story about the nature of the allegations that led to his downfall and what happens after WPP’s Q1 financial results are released on April 30.

If another poor set of financials transpires, with the inevitable attendant pressure from banks and investors, and a new CEO comes onboard at WPP from the outside who has no heritage to protect, then all bets could be off whatever is the logical best thing to do from a business operations perspective.

But I for one don’t believe that would be in the best interests of WPP’s shareholders or, more importantly, its clients.

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