British marketing giant WPP overtook long-time rival Omnicom for the first time in 2008 to become the world's biggest marketing group, as well as the most profitable. It has retained that position ever since, with revenues of $17.3bn in 2014. Very much the personal creation of its founder Sir Martin Sorrell, WPP now owns four of the world's largest advertising agencies in J Walter Thompson, Ogilvy & Mather, Young & Rubicam and Grey. These are partnered by the four global media networks Mindshare, MEC, Mediacom and Maxus, under the overall banner of GroupM. WPP also controls a substantial portfolio of market research, PR, direct marketing, design and consultancy subsidiaries. Whereas several of its main rivals have avoided large acquisitions in recent years, WPP has continued steadily to expand its portfolio, reinforcing Sorrell's reputation as arguably the industry's most skilled dealmaker. Among the more significant recent additions to the collection were digital advertising network 24/7 Real Media in 2007; global research group TNS, acquired during 2008 after a long and sometimes bitter siege; and top German marketing group Commarco, snapped up in 2011. The group's last $500m-plus acquisition was AKQA in 2012, but it continues to hoover up smaller businesses around the globe at an average rate of one a week during 2015, a year which also marked WPP's 30th anniversary.
Who are the competitors of WPP? See ranking of Leading Global Marketing Groups
Who are the clients of WPP? See individual agency profiles below for more
Subscribers only: Adbrands profile
|Soho Square||High Co.|
|Johannes Leonardo||LG Ad|
|Group M||KR Media|
|24/7 Real Media||Kinetic|
|Chime Communications||The Wexler Group|
|Ogilvy PR||Buchanan Communications|
|Cohn & Wolfe||RLM Finsbury|
Design & Branding
|The Brand Union||Scott Stern|
|Coley Porter Bell||Warwicks|
Direct & Relationship Marketing
|OgilvyOne||Grass Roots Group|
|Clockwork Capital||Global Sportnet|
|Metro Group||Spafax Airline Network|
|Prism||The Food Group|
Recent stories from Adbrands Weekly Update:
Adbrands Weekly Update 8th Dec 2016: Ad industry ethics came under the regulatory spotlight yet again this week following confirmation of an investigation by the US Justice Department into allegations that the major groups "rigged" new business pitches to favour their own inhouse production networks. According to evidence seen by the WSJ, selected unnamed agencies sought written cost estimates from independent production companies for work in order "to create a paper trail that justified to the advertiser its decision to award the project to an in-house facility, which provided a rival bid at a lower price". All the major groups now have their own inhouse global production networks, including WPP's Hogarth and Townhouse, Omnicom's eg+ and Publicis Groupe's Prodigious, as do many larger standalone agencies. Interpublic, Omnicom, WPP and Publicis all subsequently confirmed that certain unnamed subsidiary agencies had received subpoenas in connection with the investigation.
Adbrands Weekly Update 24th Nov 2016: The addressable TV deal flagged up by Sir Martin Sorrell at WPP's 3Q results conference has finally materialised. The British marketing group has teamed up with AT&T's DirecTV and rival satellite broadcaster Dish to acquire Invidi Technologies, the developer of a system that allows advertisers to target different ads to different audiences during the same commercial break, based on demographic data or customer habits. AT&T will have a controlling interest but the business will operate independently under the three companies' collective ownership.
Adbrands Weekly Update 3rd Nov 2016: WPP's reported results for 3Q got a huge boost from post-Brexit sterling weakness, with revenues jumping by more than 23% to £3.6bn. Stripping out currencies, as well as M&A, growth was more or less on a par with Omnicom, which reported last week. Like-for-like revenues (WPP's version of what other groups call "organic") rose 3.2% against the year-ago period, the same percentage as Omnicom. Excluding benefits from programmatic trading, LFL net sales rose 2.8%. The latest performance improved YTD growth to 3.9% for revenues and 3.4% for net sales. The best regional performance came from Continental Western Europe, up 5.4% in both revenues and net sales in the latest quarter, but all four main WPP reporting regions showed positive growth. At a more micro-level, the main weaknesses were in Central & Eastern Europe and Africa & Middle East, but all other markets showed balanced growth.
At the investor conference for WPP's 3Q results, CEO Sir Martin Sorrell predicted a wave of further deals in the wake of AT&T's move for Time Warner. "We need more balance in the marketplace to counter the growing force of Facebook and Google," he said. "The AT&T and Time Warner stimulus will be significant. CBS and Viacom seem to be a natural fit — we spend $1bn with CBS and $700m with Viacom so a combined entity would be the same as Facebook and Google. According to the top 10 trends we see, convergence and consolidation is going to become more important." A full bid by 21st Century Fox for the shares it doesn't already own in satellite broadcaster Sky would be "logical", and he suggested a tie-up might also materialise between Comcast and Verizon. Sorrell also flagged up some big news to come from WPP in the near future: "We will be announcing an interesting joint venture with two other companies bigger than ourselves in short order on addressable TV, so there's a big opportunity there." Two other companies bigger than $27bn WPP? The industry awaits with bated breath.
Adbrands Weekly Update 20th Oct 2016: WPP's programmatic trading unit Xaxis has acquired digital media group Triad Retail Media for an estimated $300m. The target company works with retailers and packaged goods manufacturers to create specialised ad units to boost promotional marketing of selected products via those retailer's ecommerce sites. Triad's clients include Walmart, Kohl's and CVS as well as P&G and Nestle. Billings were over $500m last year, up by more than a third on the year before.
Adbrands Weekly Update 29th Sep 2016: Dominic Proctor is stepping down as CEO of media arm GroupM to take on as yet unspecified strategic projects within the wider group. He is to be replaced as GroupM CEO by Kelly Clark, former North America CEO, and the launch CEO of the Maxus network. Clark is returning from an 18-month sabbatical from the group. Irwin Gotlieb remains chairman.
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Free for all users | see full profile for current activities: British-born Martin Sorrell began his marketing career working for sports rights guru Mark McCormack at IMG, shortly after leaving Harvard Business School. He joined Saatchi & Saatchi in 1976, eventually rising to the role of finance director. In the early 1980s it was Sorrell who arranged the funding that allowed the Saatchi brothers to embark on their big acquisition spree, initially in the UK and then in the US. As a result he gradually replaced Tim Bell, who had previously been the Saatchis' right hand man, as the effective "third brother". However while the Saatchis were putting together their biggest deal of all, the takeover of Ted Bates, Sorrell was setting up his own business on the side.
In 1986, Sorrell acquired a large stake in Wire & Plastic Products, a small publicly quoted manufacturer of shopfittings and supermarket baskets, and resigned from Saatchis to begin assembling his own group. Wary of this potential rival, the Saatchi brothers attempted to keep a controlling hand on the new enterprise by offering to provide 20% of its capital. Sorrell declined, but did agree to sell the brothers a reduced 10% shareholding. He then set out to use WPP as his vehicle for growth, picking up a handful of small marketing services businesses. By 1987, Saatchi's was facing serious repercussions from its Bates takeover as clients deserted the US agency. Meanwhile Sorrell was secretly buying shares in another US agency, J Walter Thompson. In June 1987, Sorrell made an unprecedented hostile bid for JWT. Though rebuffed by the US giant, Sorrell refused to take no for an answer, eventually raising his offer to £352m. At this level, JWT's board was forced to concede defeat. It was a staggeringly audacious deal. JWT's sales at the time were over £400m, while WPP's were a paltry £24m. But the business community was amazed by Sorrell's skill and nerve, agreeing to support the highly leveraged purchase. WPP's share price soared. The Saatchi brothers quickly took the opportunity to sell their 10% stake, convinced that Sorrell's huge ambition would come crashing down to earth.
In fact the crunch came sooner than anyone had expected. Only three months later, the world's financial markets were devastated by the stockmarket crash which became known as "Black Monday". Share prices for all companies fell dramatically, but WPP was particularly hard hit, virtually halving. Nevertheless the company continued spending, funding payments on its increasing borrowings out of the cash flow of other newly acquired companies. Conquest was set up in 1988 to service international clients, and this was followed by the purchase of Ogilvy & Mather in 1989 for a cool $862m in cash. The capture of O&M made WPP the world's biggest marketing group (overtaking Saatchi & Saatchi) but it left a huge £650m debt. A year later the Gulf war crisis sparked off another near-recession. This time WPP's financial position was far worse than it had been four years earlier. For much of 1991, the group was very close indeed to collapse. The only thing that persuaded WPP's bankers to hold their nerve was the fact that Sorrell himself agreed to invest £2m of his own money as a gesture of his absolute confidence in the company's credit-worthiness. Meanwhile, as WPP struggled to keep its head above water, it was overtaken by the growth of Omnicom and IPG, who pushed the British group into 3rd position.
In return for his personal investment, Sorrell put in place an instalment incentive package designed to reward him and his management team handsomely if WPP returned to full financial strength. He set about this with great energy, acquiring or investing in a huge number of additional companies, mostly in the marketing services sector. WPP was an early investor in digital media, building up a strong portfolio of new media content and consultancy businesses. By mid-1999, Sorrell's efforts had lifted WPP into the FTSE ranking of the UK's top 100 companies. At the same time, his personal incentive package matured, netting him almost £38m in WPP shares and cash.
Later the same year Sorrell unveiled a new incentive package for WPP's senior management. In return for reinvesting $20m in bonuses and cash back into WPP, the new scheme promised to pay out another $100m in bonuses to senior managers, including $30m to Sorrell, if WPP's total shareholder return by 2004 was among the top two in a ranking of 15 similar marketing services companies. Capping a great year, Sorrell was knighted for his services to the marketing industry. According to Prime Minister Tony Blair, Sorrell was one of several figures (among them Richard Branson) honoured because they had "left a mark on the century and will be beacons for the next century".
The next few months were comparatively quiet for WPP, although it continued to add a string of small marketing shops to its portfolio. The next big move came in Spring 2000, on the back of strong financial results for the previous year. In April WPP made a friendly approach to Young & Rubicam, offering the US agency's shareholders a one-third stake in a merged group, which would once again overtake Omnicom and Interpublic to become the #1 global marketing conglomerate. However Y&R's management team was not immediately receptive, and instead put in place a secret "white knight" deal with smaller rival Publicis, before tentatively agreeing to negotiations with WPP. The implication was that Y&R would talk to WPP, but on its own terms. If WPP's takeover bid went hostile, Y&R would merge with Publicis instead. By early May it looked as if Y&R had slipped off WPP's hook, and the company finally unveiled its plan to merge with Publicis. But shareholders were very unhappy with the new development, citing the very unsuccessful previous alliance between Publicis and FCB. At the same time Ford, a key client of Y&R, refused to back a deal with the French agency because of its affiliations with rival Renault. However Ford did already work with WPP's O&M network... Y&R was forced back to WPP's negotiating table and the deal was finally completed mid-month.
Meanwhile, WPP announced plans to launch a fourth global advertising network, rolling out the hitherto low-key Conquest brand globally. Singapore's Batey Ads and US-based Cole & Weber joined Conquest's 14 existing European offices to target medium-spend advertisers looking for global representation. The network was rebranded as Red Cell in early 2001. The group continued to complete a series of smaller deals that year, adding to its portfolio of marketing services companies, but it wasn't long before Sorrell was tempted to launch another big takeover. In summer 2001, WPP intervened in Havas Advertising's agreed merger with media group Tempus, launching a hostile counterbid. (See Tempus profile for more). Despite later attempts to pull out of the bid, WPP was confirmed as the new owner of Tempus by year's end.
In 2003, WPP snapped up failing British marketing group Cordiant Communications for a rock bottom price of £10m, a far cry from the £1.5bn at which it was once valued. WPP also took on Cordiant's £256m of debts. The acquisition was confirmed in late June 2003 after a brief skirmish with rival bidder Publicis. After initially attempting to force Cordiant into administration, Publicis withdrew from the fight, possibly because of indications that BAT and Pfizer, Bates Worldwide's last major clients, might not transfer their accounts to the French company. In September 2004, WPP was named the winning bidder in a contest to acquire Grey Global Group. The final bid was worth around $1.3bn net, split between cash and shares. A year later WPP was also linked to a possible bid for media service and research group Aegis. WPP was said to be interested primarily in Aegis's market research division, Synovate. The Carat and Vizeum networks would have been sold on to private equity group Hellman & Friedman. Any such speculation proved purely academic however. WPP eventually pulled out of any deal as a result of a fine display of brinksmanship by rival Aegis investor Vincent Bolloré.
Also in Autumn 2005, WPP generated some less welcome headlines after global creative director Neil French, already renowned for his outspoken opinions, made some ill-advised and apparently sexist comments about women in advertising at a marketing conference. As part of a speech criticizing women in advertising for spending too much time on childbearing and too little on hard work, he was reported to have said "Women don't make it to the top because they don't deserve to. They're crap." After a resulting barrage of negative media comment, he offered his resignation to Martin Sorrell in October 2005. Martin Sorrell himself made headlines that year after the terms of his divorce a few years earlier became public. The £30m payout to his former wife set a new UK record for a divorce settlement.
Another set of headlines followed in January 2006 after WPP instituted an investigation into possible fraud at its Italian operating business. Local manager Marco Benatti was fired at the beginning of the year. This led to further unwelcome attention on Sorrell's private life. A series of anonymous emails were circulated to media publications and WPP clients publicising the personal relationship between Sorrell and another WPP Italy employee, Daniela Weber, and also alleging financial impropriety. The emails appeared to originate from Fullsix, a digital agency founded by Marco Benatti and in which WPP was a minority shareholder. Sorrell and Weber later issued a lawsuit against Benatti and the managing director of Fullsix for libel and invasion of privacy. The case came to court in London in March 2007. Benatti offered compensatory damages without admitting his guilt. A subsequent lawsuit over his dismissal was settled privately out of court. See full profile for current activities
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