At Advertising Week Europe both WPP’s Mark Read and his predecessor Sir Martin Sorrell spoke about their respective positions in the industry. It came down to a question of control.
Imagine this. You land the big time: not quite your own business you always dreamed of having, but you’re in charge of something incredibly big. Not just big, the biggest, the most famous, the business with the agencies that people – real people, like your mum – could probably name. It’s a business you first joined fresh out of uni when you summoned the courage to write a letter to a man with big plans, who was himself finding his swagger. In a move that had made the front page of The Times, he had completed a hostile takeover of the venerable JWT just two years before. You arrive to witness the acquisition of another massive agency, Ogilvy Group, and the chaos that ensues as the economy enters recession. It’s a fall followed by recovery. You leave and learn your trade: earn an MBA, which you will later downplay as a “prevarication”, you hit the Booz (of the Allen & Hamilton variety), start your own company. And then in 2002, you come back and you climb, and keep climbing, so high that when the big man eventually clears the way, in 2018, you’re put in charge. Imagine that.
Then imagine that the man who cleared the way, having exploded in the headlines of the international media amid a flurry of speculation (and more than a hint of media glee), gets going again. He’s not just going, he’s out of the glass house and throwing stones, making jokes about peanuts. You’re in charge now, the new gaffer who has climbed the ranks from the backroom staff, but the team is mostly unchanged. There are deep issues – some strategic mistakes, some structural problems, most of them not attributed to you (though you may have had a hand as an executive-level employee – you are, after all, an insider). You are not synonymous with the company; he is. But the company is in decline, and he’s no longer around to take the rap. It’s your voice on the call, your quotes in the paper.
Now, he’s a competitor in charge of a far smaller machine, S4 Capital, but it’s faster than yours. You’re dealing with a transforming legacy organisation. His started from scratch, and pretty much whatever he says about it, someone is going to report it. He develops a habit of nicking your talent. He’s making a loss, granted, but revenues are rising 58%. He has built a simple offer and stokes the story that he’s coming for your lunch. That’s some approximation of the situation facing Mark Read, CEO of WPP.
At Advertising Week Europe (London, March 2019), both WPP’s current and former CEO were present – on different days – and both were interviewed by Kathleen Saxton, CEO of the headhunting firm The Lighthouse. Saxton, is, interestingly, also a practising psychotherapist. Both men responded in radically different ways to the questions, which burrowed a little into their biographies. Read held firm and was soon on to the talking points of creative transformation, simplifying the WPP offer. We did also find out that he likes to send a good GIF.
Sir Martin Sorrell, for his part, got the room laughing as he intoned on mortality, on university – “I got a 2:2 when a 2:2 really meant something” – and his hatred for email non-responders, who he regards as impolite and unthoughtful. Noting the out-of-office email left by a senior employee when he was still at WPP, he observed how, ultimately, “clients don’t respect olive groves or holidays”. Boom: we’re in.
This plays into what S4 Capital is doing: fast, immediate response. Clients’ chief frustration is pace, Sorrell continued. "If you asked me what is the thing in the last six months that I’ve heard from clients most, it’s lack of speed. They all say their organisations are too slow. That need for speed is absolutely critical".
It's a concern that he knows well. Some of the big clients that are now working with S4, including P&G, Nestlé, and the video game publisher Electronic Arts, are super-tanker organisations that enjoy power and scale. But, as Jonathan Helliwell, an analyst at Panmure Gordon told Campaign, the situation is like WPP’s super-tanker: “turning the wheel to re-orient for changing markets, but with a very big turning circle.”
For Read, this has meant pushing through some uncomfortable changes: the mergers of JWT and Wunderman, of VML and Y&R. It is an effort to bring creativity, tech and media together. While he notes that there “will be other things we do to tidy the business up”, the big moment of uncertainty has passed.
But the real uncertainty surrounds the agency holding group model, a genre with which Sorrell has become synonymous. Partly, this was to do with the financial mechanisms he employed and perfected in order to grow and acquire businesses. He will no longer use the earn-out model to build scale, Sorrell said. “The six holding companies, and indeed Accenture and Deloitte, are running into the same trap, and that is you think you can buy a whole series of small businesses and keep them separate. You can’t do that.” Now fragmentation in the media has reversed the needs of clients, who now want a more centralised, more efficient offer.
Beneath the bravado of his “faster, better, cheaper” mantra is a clear theory of how to improve this model. “S4 Capital’s model is first-party data driving digital content and driving the delivery of that through programmatic. It’s a loop.” The process, he believes, is continuous and iterative – “like running a political campaign with no election date” – in which content creation, testing and delivery don’t stop. He mentioned clients such as IKEA and Starbucks, for whom the loop process has delivered content at scale. He has no intention of monkeying around with traditional media.
It’s about taking back control, he explained, approaching the nub of the argument and the real problem for both companies. The slow growth that followed the 2008 financial crisis coincided with the maturing of the internet. This presented an opportunity that never was: that of a flood of first-party data that would give advertisers a direct relationship with consumers. As the internet has grown up, however, the sheer power of Google and Facebook has actually led to those two companies taking all of the growth in online spend and most of the data.
The battle will be about who can find a margin in this duopoly-dominated market. Whether you’re offering control or transformation, we’re looking at two variations on the same theme. We’re talking about a different competitive set. If anyone can solve this problem and deliver to clients the spoils could be great. Imagine that.