Frenemies: The Epic Disruption of the Ad Business (and Everything Else) (13 page)

“The great thing about the Saatchis is they let you do what you wanted to do,” Sorrell says, before adding, “as long as you got no public credit for it.”

“I don't remember him being very happy,” Simon Schama recalls. Sorrell cited three reasons he was unhappy: he thought the Saatchis were brilliant strategists and ad men, but too “showy,” too unfocused on managing a now sprawling business, and “he didn't have enough
power.” Plus, he adds, “I left them because I wanted to do something on my own. I was forty years old and had male menopause.” And he aimed not to suffer the fate of his father. “Some things I found difficult to accept. My dad had always said to me, ‘Build a reputation in an industry you enjoy.' And building a reputation means that people respect what you did and as a result you get some leverage and clout.” Until Jack Sorrell died in 1989, Martin spoke with his father daily.

With an eye on leaving, in 1985 Sorrell made a personal investment in a wire basket manufacturer, publicly listed as Wire and Plastic Products. When he left Saatchi the following year, he rechristened this shell company WPP and set up shop in a one-room London office he shared with an associate. His ownership stake in WPP amounted to 16 percent. Over the next eighteen months, WPP purchased eighteen companies. “We went from a market cap of 1 million pounds to 150 million pounds,” Sorrell says. Up until this time, ad agencies were gentlemanly, refusing to launch hostile takeovers. Martin Sorrell disdained these polite unwritten rules. By 1987, the shark was ready to swallow a whale: he made a hostile bid to take over the venerable but troubled J. Walter Thompson, whose revenues were thirteen times greater than WPP's. Sorrell loaded up with debt and benefited from a Japanese real estate investment that was part of the acquisition and that helped him make the $566 million purchase, which included the world's largest public relations firm, Hill & Knowlton.

Jeremy Bullmore, who was the chairman of J. Walter Thompson in London at the time, and would become a close adviser to Sorrell, says he wasn't upset by the takeover. “I thought the company had become soft.”

Sorrell would build his empire, as Jack Welch would build General Electric in that period, by purchasing companies, not starting them. Unlike Marion Harper, who was terminated for financial profligacy, Martin Sorrell erected the first financially successful advertising
holding company. Within two years, he doubled Thompson's profits. By 1999, he engineered a hostile takeover of Ogilvy & Mather for $864 million, prompting David Ogilvy to publicly brand him “an odious little shit.” (Martin is five feet six inches tall and likes to say, “Same height as Napoleon.” Press accounts of Ogilvy's attack changed “shit” to “jerk.”) Soon he would swallow two other huge agencies, Young & Rubicam and Grey. WPP would become the world's largest advertising and marketing company, with 205,000 employees in 3,000 offices in 112 countries. By 2015, WPP enjoyed profit margins of 16.9 percent, the industry's highest. He kept those margins high by aggressively diversifying WPP from a company reliant on North America and Great Britain to a company that produced up to 45 percent of its revenues “from the faster-growing markets of Asia Pacific, Latin America, Africa & Middle East and Central and Eastern Europe.” China is today WPP's third biggest revenue producer, with 15,000 employees, and WPP has a 45 percent market share in India. Sorrell was knighted Sir Martin by the Queen in 2000, and chose for the motto on his shield, “Persistence and Speed.”

Sir Martin's ambitions brought WPP perilously close to bankruptcy in 1991. A combination of taking on too much debt coupled with a worldwide recession slashed WPP's stock price and revenues and menaced his dream. Banks were pressing him for payments. Schama recalls a lunch with him at the Connaught when Sorrell shared that WPP was “in real deep trouble and close to going under.” To extricate WPP, Sorrell humbly accepted a deal that reduced the company's debt by granting WPP equity to the banks.

By 1992, WPP regained its stride. If Michael Kassan earned the title of “the connector,” Martin Sorrell earned his as “the consolidator.” WPP aggressively buys majority or minority stakes in marketing companies all over the world. According to WPP's website, it owned all or part of 412 companies. Enter the bright yellow door to its
two-story London townhouse, walk past a fake cactus plant, and settle on a short faux leather visitors' couch, and you find yourself staring up at a massive mounted orange drum. On it in small black letters are the names of WPP companies. A sleek office building several miles away houses many of these companies. Its public relations holdings include Hill & Knowlton, Burson-Marsteller, and Finsbury; its data, technology, and polling companies include—in addition to GroupM—Xaxis, Kantar, the Benenson Strategy Group, and Penn Schoen Berland; its public affairs and lobbying roster includes the Dewey Square Group, Glover Park Group, and Wexler & Walker Public Policy Associates; its various companies are major players in health-care communications, design, and direct mail. It owns sizable pieces of digital content companies like Vice Media, Refinery29, and Fullscreen. It owns a piece of the movie and TV production enterprise the Weinstein Company. It owns one fifth of a digital measurement company that competes with Nielsen, the combined Rentrak and comScore. Back when she was recruited by Sorrell to become CEO of Ogilvy & Mather and became a trusted colleague, Charlotte Beers says, “I disagreed with him buying all these below-the-line companies. I was wrong. It's why my WPP stock is so strong today.”

Today, three quarters of WPP's $20 billion in revenues spring from what Sorrell describes as “stuff that has nothing to do with Don Draper advertising” and everything to do with “communication services.” WPP, like the other ad and marketing giants, set out to acquire not just advertising but marketing agencies. Today, outside the United States, most marketing dollars are spent in England, France, Germany, Japan, and China. But late in the last century, one did not need a crystal ball to see that China and India would each house more than one billion people. The two countries now rank number one and number two in Internet users. “In Don Draper's day,” says Sorrell, who has devoutly watched every episode of
Mad Men
, “he was
wrestling with working with the New York office or the Chicago office or the Detroit office and would be very focused on the United States. The U.S. was the biggest market. It still is. But when I started thirty years ago, up to three quarters of worldwide advertising was controlled from the East Coast of the U.S. That's no longer the story.”

Even Sorrell's critics
acknowledge he is a nearly peerless long-term strategic thinker. It is customary for him—in his annual reports, in meetings with analysts, in press interviews—to lambast corporations for their preoccupation with the short term. “It's the demand for quarterly performance” issued by CEOs who only average six or seven years in office, he grouses. In an article he wrote for
The Economist
in early 2017, Sorrell assailed American corporations for share buybacks and dividends that in the year up to June 2016 exceeded their retained earnings. He claimed that corporations were choosing to reduce their investment dollars even though they sat on more than $7 trillion in worldwide cash. “One survey,” he wrote, “revealed that nearly 80% of executives admit they would ‘take actions to improve quarterly earnings at the expense of long-term value creation.' In this environment, procurement and finance departments (rather than growth-drivers such as marketing and R&D) have the whip hand.”

Sorrell was early to see that data and technology and the ability to target individuals, as opposed to demographic or income groups, would one day transform marketing, so he invested heavily in data and tech companies. A turning point, says David Moore, was in 2007, when Google acquired DoubleClick, the automated digital ad-serving platform that buys and sells ads. Moore was a founder of 24/7 Media, a similar but smaller automated ad-serving platform. The DoubleClick purchase aroused Sorrell's suspicions that Google intended to shove
into the advertising business. “I wrote to Martin suggesting to him that we do a deal. He agreed,” Moore says. “He said he wanted to acquire us, not partner with us.” In 2011, Sorrell merged Moore's 24/7 with Xaxis, a collector of data and an early programmatic advertising adopter. They were placed under the umbrella of WPP's GroupM, and openly competed with DoubleClick and Facebook's Atlas (which has since been abandoned by Facebook).

Those who work for Martin Sorrell, like those who worked for the younger Rupert Murdoch, always feel he is watching. Sorrell answers e-mails almost instantly on his BlackBerry, even when attending tennis matches at Wimbledon. Miles Young, before he voluntarily stepped down as CEO of Ogilvy, said, “I probably get three to four e-mails a day from him. I'm a great fan of his. He has an ability to be broad and strategic when needed, but at the same time he has the ability to be very detail oriented.” Sorrell is constantly in motion, jetting on commercial airlines to attend most ad conferences, be they in Los Angeles or Barcelona, to visit WPP offices in India or Brazil, to sit in on board meetings in Beijing or New York, to chair WPP's four times yearly Stream conferences in Greece, Cannes, and elsewhere, to attend Google confabs in Sicily and Burning Man in Nevada.

The incessant e-mails help forge his reputation as a micromanager, as does his fecund memory for promised but unmet executive goals. More than a few WPP executives, not wanting to be quoted, complain that Sorrell nearly suffocates them with his over-their-shoulder attention to detail. Sorrell describes the claim that he is a micromanager as “a compliment,” explaining that the CEO of a company whose size is equal to “a ministate” must delve into details. Keith Reinhard, who orchestrated the ad agency mergers that became Omnicom, observes, “Omnicom is considered a holding company and WPP is a parent company.” Others disagree. David Sable, then in his sixth year as the CEO of Young & Rubicam, said, “Martin is an overrated meddler.
Most people think he gets down in the weeds. I don't think that's true. Martin has rarely told me what to do.”

To understand Sorrell as a manager one has to begin with his self-identity as a founder, not a manager. He flicks aside the shareholder critics, not to mention former London mayor Boris Johnson, who railed against his steep pay—£43 million in 2014 and £70.4 million in 2015, making him the highest compensated executive in England. In an op-ed page piece he wrote for the
Financial Times
in June 2012, Sorrell declared, “I have been behaving as an owner, rather than as a ‘highly paid manager.' If that is so, mea culpa. I thought that was the object of the exercise, to behave like an owner and entrepreneur and not a bureaucrat.” Today he owns 2 percent of WPP and chooses not to diversify his investments but to tie his wealth to how his company performs. “My dad said, ‘Invest with companies you know best,'” he says. Despite his rich pay, Sorrell rarely chooses to fly privately, insisting that it would cheat shareholders. He feels liberated to opine on most any subject, from Brexit to Donald Trump's immigration policies (he was opposed to both), not to mention the unabashed joy he takes in belittling Maurice Levy, his Publicis rival.

Members of his WPP team bristle when he publicly disparages “the snooty” attitude of creatives, who play a diminished role in the advertising business. Interviewed by Michael Kassan before an Advertising Week audience in September 2015, he proclaimed, “Seventy-five percent of our revenues comes from things—$15 billion of nearly $20 billion—Don Draper wouldn't recognize.” Often, he will declare that the folks who massage data, or buy ad time, or the financial types who shape an acquisition, or the engineers who devise ways to spread messages on social networks, are as creative as a copywriter. Miles Young doesn't disagree that many marketing professions can be creative, as can a plumber. “But there's a type of creativity concerned with ideas, and that's what Martin probably doesn't appreciate because he's never
worked inside an advertising agency.” It is not unusual to hear sneers that Sorrell is merely
a suit
, an accountant, as Bob Greenberg has described him. Jeremy Bullmore, who serves as an intellectual brain trust for Sorrell, would challenge that characterization. But he does disagree with Sorrell for bashing creative agencies: “That's the wrong signal to send, and I don't think it's accurate.” He does not dispute Sorrell's assertion that various parts of an agency can be creative. But his problem with the signal Sorrell is sending is that “it gets interpreted that we're not in the advertising business anymore. That's not a sensible thing to say because he is in the advertising business. The WPP group is an advertising group. He often has this irritating habit of saying things that on one level are obviously true, but their interpretation is not only wrong but dangerously wrong.”

Like any battle-scarred veteran, Sorrell has amassed detractors. In London, he is called “six twenty-one” behind his back, because June 21 is the year's shortest night and he is thus "the shortest night." Michael Kassan believes the bad blood between Sorrell and Maurice Levy stems from when Levy and Sorrell were in a bidding war to buy the Cordiant Communications Group. “I was in the middle of it. That's why Martin and I didn't talk for three years,” Kassan says. He had not yet started MediaLink and was representing Cerberus Capital, the private equity firm whose specialty is making investments in distressed companies. Cerberus owned $79 million of Cordiant's debt. But Cordiant had become overextended and slipped into default. Cerberus was unfamiliar with advertising agencies “and they brought me in.” Kassan spent three months in London, going back and forth between Sorrell and Levy. “Cerberus wanted to maximize its investment. Maurice and Martin were bidding against each other and Martin won. But it cost him more than he wanted it to cost him, and he blamed me. He made it personal. It wasn't personal.”