Arun Sudhaman 24 Oct 2018 // 4:47PM GMT
WASHINGTON, DC — Sir Martin Sorrell took aim at the holding groups today at the PRovoke18 Global PR Summit, during a feisty keynote conversation with Holmes Report founder and chair Paul Holmes.
Starting with the FT story that reported several allegations regarding the S4 chairman's acrimonious exit from WPP, Sorrell sought to turn the spotlight back onto the holding groups, none more so than his former company, which he consistently referred to as "Wire and Plastic Products".
"Sadly, what seems to be happening at WPP is it seems to be a car crash in slow motion," said Sorrell, pointing to a slew of account reverses that the group has suffered in recent weeks. "Eight account losses of not insignificant proportions."
Sorrell described the FT story as "factually inaccurate", instead pointing to a "breach of trust" between himself and WPP chairman Roberto Quarta, who he referred to as "an engineer": "I think the best thing is they give him the wire and plastics engineering division to run. I think that’s the root of the problem — a failure to understand the nature of the business."
Holding group issues
That business, said Sorrell, is fundamentally changing in ways that hurt the value of individual agency brands. This, he noted, has significant implications for the holding groups, all of which are faced with the challenge of integrating their component agencies for the benefit of clients.
"The strategy at WPP is to move to one firm, but over a longer period of time," said Sorrell. "John Seifert I think is doing the right thing. The question is about execution, as you collapse these brands into one."
With that in mind, Sorrell also directly addressed H+K Strategies' recent split with SJR. "SJR was part of H+K but for some reason that defeats me they are splitting it again."
On the other holding groups, meanwhile, Sorrell was similarly forthright.
"Take the third largest company, Publicis," he added. "You’ve lost the Saatchi brand, the Burnett brand, the BBH brand. That might be best in the long term. But in the short term it causes tremendous disruption."
Meanwhile, Sorrell said that "Omnicom has no strategy", leading to the challenge of meeting the client requirement for the best people, regardless of agency brand. "Doesn’t have a strategic bone in its body, but it has very good companies."
"Publicis," said Sorrell, "has the best strategy, in my view, but the execution is very quick." That left Interpublic Group — "probably in the strongest position, but why they then go out and buy a data business for $2bn?", while "Havas has got lost within Vivendi."
As for Dentsu, Sorrell observed that the gaijin/local issue still plagues its operations, with foreign revenues set to overtake domestic earnings for the first time in the Japanese group's history. "So maybe it’s the right time to appoint a gaijin to run the company."
And while he admitted that he misses the scale of his former employer, he explained that trying to transform these businesses is "immensely difficult."
"What do I miss? I miss scale. I’ve always been intrigued by scale. Hopefully we will get scale. The other side is you don’t have the ball and chain. You don’t have this legacy structure weighing you down. You’re trying to change the engines while you are flying the aircraft. It is an immensely difficult thing to do. It is much easier to start with a fresh sheet of paper. The need to be quick…is absolutely key."
Those statements ultimately elicited a response from the floor, in the shape of Burson Cohn & Wolfe CEO (and erstwhile Sorrell lieutenant) Donna Imperato, who said that she felt "Publicis' strategy is wrong", because of the need to manage client conflicts.
"I fundamentally believe you have to have one firm," responded Sorrell. "The thing that bedevils our industry is that Donna gets up in the morning because she’s Cohn & Wolfe, now BCW. The difference between JWT, Y&R and Grey — there isn’t a difference. There is a difference, only in my mind, because of conflict. There is no fundamental difference.
"The point is, come back to the clients, who after all pay the bills, they want the best people working on their business," continued Sorrell. "Everybody in this room fights for their brand. Renault turns around and says I want Omnicom and Publicis to work together for the benefit of Renault Nissan. The world has changed. Years ago our own tribes were as important to our own clients as us. No longer."
Sorrell also denied the claim from the FT that he exhibited bullying behaviour towards his subordinates at WPP, when Holmes asked whether anything from the article had made him reflect on his management style.
"By that do you mean I want to win? Yes. Do I want to come second? No. Do I like losing business? No."
Sorrell put his style down to the "fundamental difference between founders and managers."
"There’s a fundamental difference between somebody who founds a business, starts it from scratch," he said. "You value any organisation that’s being built, no matter how small or medium sized. If you’ve been in the business for a very long time, you tend to diminish the importance of small businesses."
And he also refuted the notion that he requires a chip on his shoulder to succeed, describing it to Holmes as another "cheap shot". "If a chip on your shoulder is a desire to succeed, fine. Mea Culpa. It’s all about winning. I don’t want to come second. That’s not win at any cost, by the way. Win sensibly. When I left WPP, people would say 'why don’t you smell the roses?' I don’t believe in that. I want to get back on the horse as quickly as possible."
On the same theme, he dismissed criticism of his managerial style, characterising it as a key element in WPP's rise over the past three decades. "When people say I’m a micro-manager, I actually regard that as a compliment, and not an insult. People that abstract themselves from the detail or extract themselves, always suffer. It’s not because you want to influence the detail, but by knowing what’s going on you can form a view about what’s going on at the business. That’s fundamentally important."
The PR business
Turning his attention to business issues, Sorrell pointed to the pressure facing the marketing communications business, from clients that simply want "faster, better cheaper." This, he said, has made it easier for smaller agencies to expand their operations compared to the bigger networks, thanks to the three drivers of digital content, data and media budgets.
The focus on those three areas, added Sorrell, had actually served to make life easier for PR agencies. "PR firms tended to be faster. They tended to have very good people. And they tended to more efficient, more cheaper. That’s one reason why the microscope on PR budgets was not as big as it was on ad budgets."
"PR has benefited from not being so far up the procurement ladder," said Sorrell. "The thing they turned to first was the media buying where the bigger budgets were. That was annoying for the PR agencies, but that’s proven to be an advantage."