Was Martin Sorrell a victim of the very forces he warned about?

He is gone: Martin Sorrell, the famous and massively successful founder and boss of the world’s largest advertising agency is off under a storm of controversy. But what’s next for WPP, what’s next for Martin Sorrell, what’s next for the advertising business?

Article updated: 18 April 2018 9:00am Author: Michael Baxter

Back in the early 1980s, a British advertising agency, famous for helping secure Margaret Thatcher’s victory over Labour a few years’ earlier, bought a much larger US company to eclipse J Walter Thompson as the world’s largest advertising agency.

Back in those naive times, the ad world was puzzled. How was it possible to buy a bigger company, the way the Saatchi’s did? Later we found out the answer: it was Martin Sorrell.

The financier

But the man who went on to become Sir Martin Sorrell was a numbers man - at least he was then. He was the finance guy. Contrast that with Charles Saatchi who designed, or at least played a key role in designing the famous pregnant man advert - would you be more careful if it was you who got pregnant?

In those days, Saatchi and Saatchi reigned supreme, but it was four men who stood behind the success, Charles and Maurice Saatchi, Tim Bell (now Baron Bell) and Sir Martin. What a team!

WPP

It did not last so long. In 1985, Sir Martin bought a 30 per cent stake in Wire and Plastic Products plc.

The company became WPP, of course, and thanks in part to financial brilliance, Sir Martin, via a series of acquisitions, including Grey Group, Ogilvy and Mather, Young and Rubicam, and J Walter Thompson, created the World’s largest marketing agency. WPP also owns the giant PR agencies Hill and Knowlton and Burson-Marsteller.

It was not always easy, and Sir Martin was not always popular. David Ogilvy - the man who is known as the father of advertising, supposedly the TV series Mad Men was based on him - once called Sir Martin an “odious little s***.” But it says much for Sir Martin that he and Ogilvy became good friends and Ogilvy finally conceded he was wrong about Sir Martin.

Personality

Maybe WPP is misnamed - perhaps it should be called PPP - the three Ps, in this case, personality, personality and personality.

Because the strength of Martin Sorrell’s personality seems to be the main explanation for WPP’s success. Known for his attention to detail, responding to emails within seconds, extraordinary memory, but also a man who could charm prospective and existing clients.

Departure

And now he is gone. WPP issued a statement saying: “The previously announced investigation into an allegation of misconduct against Sir Martin has concluded...The allegation did not involve amounts that are material.”

What does that mean? At the moment we don’t know, eventually we will surely find out.

Share price

But maybe there is another reason for his departure - shares are down by a smidgeon more than a third over the last year.

They have fallen some more since his departure - the company could be ripe for a takeover.

Disruption

There’s a deeper point.

Sir Martin has been busy warning the media world that technology is going to disrupt their business models, possibly to the level of wiping them out, for a long, long time.

He spotted the great digital disruption years ago. The rise of Google and Facebook has turned the advertising world upside down.

We are seeing a fight back at the moment, as a British media, a big chunk of whom have been telling us distortions of the facts for years to advance their own political agendas, or to sell more copies as they target our baser instincts, look up from the gutter they frequent to say: “We can’t trust social media.”

But disruption is hitting the advertising business too, it’s about programmatic advertising these days, economies of scale may not be so important. Is the era of WPP, Publicis and Omnicom coming to an end?

Sir Martin Sorrell

Finally, we learn there is no non-compete clause. Sir Martin can go off, set up a new company, and pitch for WPP clients. Maybe he won’t do it, but he could if he wanted to. He is 73, which is quite young these days. I would not bet against Sorrell Advertising, or Sir Martin Marketing, or PPP, yet emerging as a force on the world stage.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.