What next after Sorrell?

Clients, shareholders and employees of WPP are right to pay respect to the man who built arguably the biggest ‘advertising group’ in the world but also to wonder what impact his departure will have for them. The more interesting question is what impact it will have on the industry, indeed how even the industry is defined, an impact not necessarily centered on the man himself but by the debate that his predictable yet unexpected resignation will spark.

Predictable – well, he is into his 8^th decade and no-one lasts forever particularly when times are a’changing and your share price is weak. Unexpected – because he said himself they’d need to carry him out in a box and no-one doubted that he meant it.

A word cloud of the headlines on the day after the announcement would feature ‘advertising’, ‘titan’ and ‘colossus’ - a reflection on not just his achievements but also his status as the industry and indeed a world business spokesman. He very cleverly positioned the Ad industry as the global economic ‘canary in the cage’ and himself as the wisest owl in the industry. This allowed him to bestride the stage at Cannes and Davos, the go-to man for interviews, uber-connected and uber-opinionated. The performance of WPP could therefore be subsumed under, on occasions defected to, a debate about not just the state of the industry but indeed the state of the world. Neat trick.

What about the real debate? What is the future of, let us call it, the ‘market for marketing services’? Do groups like WPP have a role to play in their current form? There is a simple rule of thumb that says that when a business cannot come up with a clear way of describing what it is they actually do then there might be a shortcoming in strategy (too many ‘and’s are not that confidence-inspiring either). On WPP’s website they describe themselves thus:

“WPP offers a comprehensive and, when appropriate, integrated range of communications services”

Omnicom say, “Marketing Communication Services”. Publicis cover all the bases – “largest marketing and communications group’ together with a lot of ‘ands’ – creativity, consultancy, technology, digital, advertising, PR etc.

Sorry, but this communications thing is not clear, nor is it accurate, nor is it really any improvement on good old ‘advertising’. This is not semantics. It reveals that these massive groups may not really know what they offer, how they offer it, or how they should charge for it. All of them talk about size with very little that connects to the advantages of scale. If scale offers a better service they should be able to command a premium as do the really big management consultants or lawyers or accountants. But then of course they are partnerships. If scale offers economies they could offer a discount or better still they could take a higher margin – which is what they have done. There are some cost advantages that come with scale (and many more though simply better financial discipline) and a higher profit multiple of earnings allows you to make acquisitions. So, what you become is a holding group for a myriad of individual marketing services businesses that otherwise would not be fit for public ownership.

The world is changing, more than ever, and that means that no-one ‘marketing services model’ will ever work for everyone.

Technology is having an impact and one outcome is that there can be more flexibility and agility to use different teams and tools for different issues and tasks. There will be more, not less, new service offers and that is a good thing for the industry and for clients. Scale can be good or it can be irrelevant - the skill is to know which is which. A lot of people (who never actually read it) thought the message of economist EF Schumacher’s book “Small is beautiful” published way back in 1973 was that only small is good. It wasn’t - it was that small could be just as beautiful as big. That is still true.

But if one wants to think about what ‘right’ might look like for a large multi-faceted marketing services group, think of this scenario. McKinsey, Accenture and WPP have been bought and merged by Apple (who could easily afford to buy them all) so the design, UEx and eco-systems must meet Apple standards. They want global reach but beyond that no-one minds about size, only quality and profitability. So it’s fine to ‘right-size’ the new business, dispose of any part of it and structure it any way you want. What would it look like, how would it be described, how would it define its industry, its purpose, how would it be run, what clients would want to use it, when and why? Could it command a premium? This would be my proposition – “We help clients save costs and create demand through magic and logic powered by all manners of information”. And like Apple I’d develop a proprietary system interface.

While you’re thinking about that - one thing Sir Martin Sorrell never did in 30 years was sell a business, he only ever acquired. Now that is strange. 

By Mark Sherrington, founding Partner of G=mc2, a new formula for brand-led growth. Follow him @marksherrington