Memories of Sir Martin Sorrell and Observations on WPP
By Bessie Lee
Sir Martin has retired and is no longer the head of WPP Group. He spent most of his life building WPP and took the Group to its peak. Now it’s time to hand the Group over to its next CEO, although we are not yet sure who the next CEO will be.
After news of Sir Martin’s retirement broke, many friends on social media asked for my take on this. I grew up at WPP. Although I left the group in May last year to focus on my own strategic investment and incubation venture, I am still emotionally attached to WPP Group and Sir Martin included.
Sir Martin has been a diligent and hardworking CEO at the holding group level. Among all the major marketing and communication holding groups, very few holding group CEOs would devote as much time and attention to China as Sir Martin did. He demonstrated his commitment in his words and actions. Sir Martin would come to China at least six to seven times a year. Every time he was in China, he would meet with clients, media and colleagues.
I remember back to the end of May 2013, when Sir Martin managed to set aside nine full days of his hectic schedule for China. We arranged 29 meetings in six cities for him. I accompanied him for the entire trip and had the pleasure and privilege to closely observe Sir Martin, taking in small details such as how he handled his own luggage, and how he once used his body to stop the high-speed train door from closing so a colleague would not miss the train. I have the utmost respect for the great leader he truly is.
Sir Martin spent three decades to build WPP Group. I joined WPP on 1 August 1990, so I only saw the last five years of that first decade. WPP’s first decade was turbulent. The Group once over-extended its capital and went through a financial crisis that almost crippled it. Luckily, a collection of great minds, including both senior and junior colleagues, worked tirelessly to pull the Group through the crisis. WPP survived. What doesn’t kill you makes you stronger.
In the second decade, the strongest in its history, WPP enjoyed excellent organic growth. Ambitious strategic acquisitions contributed to the group’s overall financial performance. This strong performance positioned WPP as the world’s number one marketing and communications group in the world. During this period, advertising markets in North America and most European countries were the group’s growth engine.
Another contributor to WPP’s growth was the early entry into emerging markets. Unlike other marketing and communication holding groups, WPP was an early entrant to emerging markets such as APAC, Latin America, Eastern Europe and Africa. Even if they had only one or two MNC clients with local market needs in the emerging markets, WPP would choose to enter. This strategy gave WPP first mover advantage in those markets. When more clients started expanding in these markets, WPP agencies were ready to manage their business.
During this second decade, there weren’t many new developments in media channels, but the new consumers in emerging markets presented tremendous potential. As an agency group with great expertise in managing scale, WPP prospered. It was also during this time that WPP experimented with a new agency format, the media agency. WPP Group first piloted the idea in Taiwan between 1995 to 1997. In November 1997, WPP officially rolled out Mindshare to most APAC markets and later globally. Mindshare was an innovation in the agency industry. Because scale meant everything, Mindshare’s launch was extremely successful. GroupM was the upgraded version of Mindshare.
In the same decade, WPP experimented with the global client-dedicated team. Simply put, a team equipped with expertise in all disciplines was assembled to work for one client under one roof and banner. This experiment was well received by major clients and gained enormous success.
WPP was also very ambitious with mergers and acquisitions. In terms of number of acquisitions, WPP was once the world’s No. 2 just after Google. WPP did a great job with post acquisition integration as well. WPP would integrate the acquired company into an operating company within the Group. Back then, when there was more business to be realized, the acquired companies were welcomed by most operating companies within the group. Everybody prospered.
During this second decade, Sir Martin and WPP were constantly driving innovations, changes and reorganizations. These ten years were full of entrepreneurial spirit and energy. Relatively speaking, in the third decade of history, WPP saw less innovation and change. At best, the changes were only incremental adjustments to innovation started in the second decade. In terms of overall group management, WPP went for more centralization. Management by numbers took over management by strategy. It was in the last decade that the Group met its most severe challenges.
In the third decade of WPP history, the world had changed. Business was under tremendous pressure. There was market saturation and even decline in North American and most European markets. New consumers in emerging markets also peaked. MNC clients started to tighten their marketing budgets. An increasing number of clients went for zero base budgeting. That was the first blow for the agency groups. Consumers changed too. Consumers no longer adored or even trusted advertising. The rise of the internet and the constant evolution of technology, both hardware and software, gave consumers their own communication vehicles. When mobile phones came with cameras, consumers were equipped to produce their own media. Advertising became redundant.
Many popular media channels were constantly changing. Again, the internet and technology gave long-tail platforms new life. Suddenly scale was no longer an advantage. Instead, the advantage went to those able to keep up with changes in technology, channels and content. None of this had anything to do with scale. Unfortunately, most agency groups were resting on the success they had enjoyed during the previous decade. There was no sense of urgency. In fact, there was complacency. While big agency groups were still enjoying their champagne, thousands of boutique specialist agencies started taking off. These specialist agencies had expertise in vertical fields that filled gaps that large agency groups did not have the capability or interest to take on. Clients began awarding contracts to these small but efficient specialists which individually lacked scale, but collectively took big chunks of business away from the large agency groups.
In the same decade, the importance and significance of data became real. Large agency groups were still operating very much on a human capital (and labour-intensive) model, or rather, a middleman model. They didn’t own any media channels or platforms, nor any data. In an era where data was gaining importance and traction, the traditional agency groups suddenly lost their positioning.
WPP’s acquisitions in this last ten-year period were still centred mostly around agencies using labour-intensive business models. Though the post-acquisition integration was the same, most of these newly acquired agencies did not bring any revolutionary change. At best, they brought in marginal improvement. Facing declines in their own businesses, WPP agencies were less able to help newly acquired agencies grow. The same acquisition ambition could no longer yield the same impact to the Group.
In this last decade, the marketing world decentralized. Local markets, local brands and local consumers gained greater power and say in what they wanted. The global portfolio no longer tilted towards Western markets or global headquarters. Most global CEOs at client companies now had experience in multiple markets and regions. They are familiar with the uniqueness and commonality between regions and markets. The agency groups’ talent development was not of the same approach. Most global agency CEOs rose in their home base offices in either North America or Europe. Most of them have never actually stationed in APAC or Latam or Africa. The disconnect between local and global emerged in the agency group and they are not aligned with clients understanding of how the world is operated.
If WPP Group had realized the necessity of technology and data a decade ago, and adopted an attitude that treated each day as a chance to re-make, re-build, and re-organize, WPP would today enjoy strong client relationships, technically advanced marketing capabilities, and real-time analytics on consumer behaviour. To thrive, companies must constantly operate under a sense of crisis that spawns innovation. The challenge to operate in this way must be company-wide, rather than just the KPI for a single Chief Innovation Officer or a Chief Transformation Officer.
I wish WPP and Sir Martin all the best in the future.