WPP is the largest marketing services company in the world. It has 3,000 offices and 200,000 people in 112 countries.
Its CEO Sir Martin Sorrell has resigned following an investigation into his use of company funds. He will be treated as “retired” so eligible for the benefits due to him.
The Chairman Roberta Quarta becomes Executive Chairman, and Mark Read (who runs the Wunderman network) and Andrew Scott (who was COO of WPP Europe) become joint operating officers.
A search has been launched for a successor to Sir Martin Sorrell as CEO of the group.
A new CEO will have to:
a) placate restless shareholders
b) quickly form a new governance solution and operating board
c) develop a strategy for growth
d) reassure advertisers that the promise of WPP effectiveness for advertisers using several of its companies (that Sir Martin Sorrell termed horizontality) is delivering
e) convince top talent that their career is best developed at WPP (you can bet that competitors will do all they can to destabilise clients and key staff)
This process will take some time to develop, even if a CEO is found quickly. 2018 and 2019 will be a period of big change and “choppy waters”. We have seen the same at Publicis Groupe as Arthur Sadoun took over from long time CEO Maurice Levy.
Flock Associates amongst its other services advises advertisers on its agency relationships, and agency partners. We represent some of WPP’s largest clients, and many smaller ones.
Whilst the leadership situation at WPP has emerged rapidly and remains fluid we have written the following Q&A to help advertisers.
Q. Is there an immediate danger to my business being disrupted by this issue?
A. No. It is unlikely that in the short term there will be a negative impact on any advertiser’s business relationships with WPP agencies. It will be business as usual for your agencies, albeit with a distracting “background noise”.
Q. What is the mid to longer term impact?
A. It is too early to tell how the markets and advertisers will react to the news. If the shareholder value of the company falls further it will strengthen the call for WPP to be broken up in some form, releasing cash to shareholders. It has been suggested that Kantar (the research, data, and consulting part of WPP) be sold to generate funds. Sir Martín Sorrell was a polarising figure for many of his companies’ clients, it is not likely that many will negatively react to the news of his departure.
Q. Should I review my agency as a result of the leadership changes?
A. No. You should reassure your agency and provide support. You should keep abreast of the changes at WPP and other groups (Flock provide a subscription service if you are interested in this) and continually evaluate your agencies performance (Flock provides an Agency Appraisal Tool for this).
Major clients of WPP’s Kantar may decide to look at their contracts and consider change of ownership clauses and make plans accordingly.
Q. How do I get the best from my agency and WPP during this period?
A. Flock recommend it should be business as usual, i.e. look after key talent. Be supportive. Be transparent about your goals and objectives. Have a great appraisal system so they and you know what is good and what needs to be improved.
Q. What should I ask for when I am engaged by senior WPP leaders?
A. Many Flock advertisers have similar issues and concerns with WPP (and to be fair with some other holding companies too) and have engaged Flock to help them with the following topics.
• Unlock the power of your data for the benefits of clients. Do not try and own it or mis-use it, do try to join your media and research data together and place it at our disposal.
• Contracts and transparency, especially in media. There is a feeling that WPP is not acting as an “agency” and in the best interests of its clients in many areas of media and contractual compliance. You may urge WPP to change both its philosophy and behaviours with regards contracts and transparency.
• Put in place effective agency governance to make the promise of “Horizontality” a reality. WPP “Team” concept needs to improve for the benefit of advertisers
• Develop the next generation of leaders and innovators. There is a feeling at many Flock clients that WPP have a generation of leaders and innovators “missing” and that significant at effort needs to be put in place to secure a new generation of inspiring agency CEO’s globally and locally.
As it stands Flock believes that Advertisers need to take control of their agency relationships and be much more proactive and assertive. The WPP leadership situation may shine a light on the issues at one holding company but references issues that are also relevant for other holding companies, whether they have a leader or not.
If you’d like to discuss how best to engage effectively with your agency or holding company please let us know by contacting Julie Marshall at email@example.com