Group Chief Executive, WPP Group PLC
Sir Martin Sorrell has led the WPP Group since he created it 22 years ago, growing it into one of the world's largest advertising and marketing services organizations. With revenues of around $12 billion, it comprises some of the most famous firms in advertising, marketing, and public relations. He is now positioning WPP to turn the challenges of major technological and geographical shifts into opportunities for even greater success.
In 1985, Martin Sorrell was ready for a change. He had spent nine years at Saatchi & Saatchi, helping the London-based advertising firm reach superstar status with his strategic and financial skills, but he had just turned 40 as well. "I had held various marketing positions since graduating from HBS, but had always wanted to start my own business," he says in a soothing British accent. "The time had come to do that."
The idea was to buy a small, publicly owned corporation in the United Kingdom—what's known there as a shell company—and turn it into a major multinational marketing services organization. The firm Sorrell bought a stake in was Wire and Plastics Products plc (soon to be renamed WPP Group), a maker of wire shopping baskets. In 1986 he became chief executive of WPP, which started small by purchasing companies in Britain and the United States specializing in sales promotion, design, and direct marketing.
But WPP wasn't small for long. In 1987 Sorrell made an astonishing move. Using both debt and equity, he bought one of the most famous names in the business, the J. Walter Thompson Group (including ad agency JWT and public relations powerhouse Hill & Knowlton) for $566 million. It was the equivalent of a minnow swallowing a whale. "They were thirteen times our size, but it was an opportune moment to strike," he explains. "JWT had lost some high-profile accounts, and there was considerable unrest among the employees and shareholders as well as the clients."
A second big deal followed two years later with the acquisition of another industry icon, The Ogilvy Group, for $864 million. A pattern had been set that continues to this day. The owner of some 100 companies, including the Young & Rubicam Group, which WPP bought in 2000 for a record $4.7 billion, and the Grey Global Group, which Sorrell brought into the fold in 2005, the firm now employs 100,000 people in 2,000 offices in more than 100 countries. Among its clients are over 330 of the Fortune Global 500 and more than half of the Nasdaq 100.
With Sir Martin at the helm (he was knighted in 2000), in 22 years WPP has become a giant with revenues of some $12 billion, offering a full range of services in areas such as advertising, digital and promotional marketing, public relations and public affairs, branding, consulting, and media investment management.
Although 40 percent of WPP's business still comes from the United States—a reflection of the continuing dominance of this country's multinationals and financial services firms—Sorrell's frequent visits to what he calls "faster growing markets" signal the seismic geographic shifts he says will change the face of the consumer marketplace.
Effortlessly rattling off a string of statistics, he notes that while China and India now represent more than one-third of the world's population, that figure will climb to two-thirds for Asia as a whole by 2014. And by 2050, Pakistan and Brazil will be among the largest countries by population in the world. "Asia Pacific, Latin America, Africa, the Middle East, and Central and Eastern Europe will be responsible for a growing share of our business," he asserts. "To drive top-line growth, companies will have to take advantage of these new concentrations of population."
WPP and its clients will also have to adapt to a nonstop succession of technological changes brought about by the Internet, mobile telephony, and an explosion in video capabilities. "We need to find answers to important questions," he says. "How do you manage an agency like this when the traditional skills of making sixty-second television ads are challenged by the growth of digital or participatory media? How do you manage a client when TV, newspapers, and magazines are being attacked by online presences?"
One operation that Sorrell thinks about a lot as a future competitor is a current client and supplier, Google, which has shown an interest in expanding its reach beyond online search advertising and aims to use the entire gamut of video, audio, and print media to create advertisements for companies of all sizes worldwide. When Google bought digital marketing strategist DoubleClick last April, WPP quickly countered with the purchase of 24/7 Real Media.
Also high on Sorrell's agenda is the subject of corporate social responsibility (CSR)—or global corporate citizenship—which he says was catapulted into the public consciousness by, among several other factors, the mammoth charitable foundation created by the combined wealth of Bill and Melinda Gates and Warren Buffett. "We have evidence," Sorrell says, "that young consumers are more emotionally connected to brands or products that take a constructive view of CSR, which is now an inextricable part of most corporate strategies, including ours."
Sorrell already holds a place of honor in the world of advertising and marketing. As HBS professor and WPP board member John Quelch has put it, "Sir Martin reinvented the industry. When the opportunity arose to acquire JWT, he understood that what was needed by most clients was an integrated solution" that included various components.
His many successes notwithstanding, what keeps Sorrell up at night? "Given the rate of technological developments, I worry a lot about the new things a few Ph.D.'s in a garage in Shanghai might be doing." Chances are Sir Martin will be able to respond effectively, no matter what.