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 record revenues of $19.4bn in 2016. 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 some rivals, like Omnicom and Interpublic, 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.|
|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
|Clockwork Capital||Global Sportnet|
|Metro Group||Spafax Airline Network|
|Prism||The Food Group|
Recent stories from Adbrands Weekly Update:
Adbrands Weekly Update 11th Jan 2018: WPP appointed Mediacom chair Karen Blackett as the group's first ever country manager for the UK, overseeing all its local agencies. That makes the widely respected Blackett arguably the single most powerful individual in the UK industry. WPP is the country's dominant marketing group with local revenues of around £2bn. In a memo to all staff, Sir Martin Sorrell said "Karen will focus on our core strategic priority of horizontality: ensuring our companies work together effectively and present a seamlessly integrated and simplified offer to clients. She will also support efforts to attract and retain the best and most diverse talent, generate cross-group business opportunities and identify potential acquisitions and investments."
Adbrands Weekly Update 30th Nov 2017: WPP launched a pre-emptive strike to ward off speculation within the media and investment community of possible changes to its relationship with key client Ford. In a formal statement filed with stock exchange regulators, the group said that Ford this week "verbally informed WPP that they are considering their future internal and external marketing model and want to enter into a further agreement with WPP for a period to be agreed in 2018. WPP is considering the proposal and is in discussion with Ford on next steps." For its part, Ford said that WPP "are trusted partners and curators of the Ford brand," but also that "we are exploring options to improve the fitness of our marketing and advertising operations. No decisions have been made." Good news? Bad news? Who's to say, but chances are that it will involve an adjustment (downwards, naturally) to WPP's fee income. The statements coincided with the appointment of non-WPP agency, Laundry Service, to develop social media content for Ford's secondary brand Lincoln. It's by no means the only non-WPP agency working on Lincoln business - the bulk of that car's marketing is handled by dedicated WPP unit Hudson Rouge - but it's a sign that Ford is prepared to cast its net wider if necessary.
Adbrands Weekly Update 23rd November 2017: In a surprise turnaround, WPP has abruptly withdrawn its objections to a private buyout of Japanese marketing group ADK by Bain Capital, despite several weeks of outspoken objections to any such proposal. WPP had even initiated legal proceedings against ADK to block the proposed break-up of their two-decade partnership. Yet despite the tough talks over the past few weeks, WPP has now, seemingly overnight, agreed to accept the buyout at the original price offered by Bain of around $33 per share. It had previously said that price undervalued ADK. According to Bain, the two sides are even in talks over the possibility of WPP taking a fresh minority holding in a new entity controlling ADK. Bain's offer - and WPP's acceptance of it - are conditional upon acceptance by a majority of shareholders. WPP has agreed to surrender its own 24.9% holding. No reason was given for the volte-face, but it may have something to do with WPP's own sagging market valuation. Its stock price has been in steep decline following a series of disappointing quarterly results. From an all-time high in March, WPP's shares have slumped to a three-year low.
Adbrands Weekly Update 9th Nov 2017: Struggling to manage a host of media reviews as well as a sharp downturn in performance, WPP has expanded the role of Lindsay Pattison, recently appointed as chief transformation officer for the GroupM media division. She will now take that role across the group as a whole. WPP's shares have continued to slump in the wake of disappointing 3Q results, falling by almost a third from their Feb 2017 highs to a three-year low this week.
Adbrands Weekly Update 2nd Nov 2017: WPP's 3Q figures were its weakest for several years, and also significantly worse than any of its peers so far. Revenues of £3.65bn represented a like-for-like decline of 2.0%, while net sales excluding disbursements and programmatic were down 1.1%. For the year-to-date revenues were down 0.9% LFL and net sales down 0.7%. There was no doubt where the problems lie: North America suffered a shock 5.1% fall in LFL revenues, compared to more or less flat performance across the rest of the world as a whole. The UK was up 1.8% LFL, while emerging markets of Latin America and C&E Europe were strong positives (up 9.3% and 8.2% respectively). But there were declines in Western Continental Europe (down 0.9% for the quarter) and especially Asia Pacific (4.5% quarter), where China was down more than 6% and India over 9%. WPP reduced its forecast for the year as a whole to flat growth, but it still faces a number of major account reviews which could push it into negative territory (see below).
There were big signs of relief at Interpublic, after Initiative retained Amazon's $1bn global media account following review. Yet that also appears to have resulted in yet another blow for struggling MEC, which appears to have lost its share of the account handling digital media. If so that loss leaves questions of what business Wavemaker - the agency being created from the merger of MEC and Maxus - will be left with. Only this morning, news broke that Maxus has lost the media account for UK telecoms giant BT following a review, though WPP has been able to hang onto the business by negotiating a transfer to fast-expanding sister agency Essence. In other new developments, MetLife quietly moved its global media out of MEC to Mediacom, and drugmaker Amgen restarted its review of global media, also out of MEC. MEC is already wrestling with reviews from multiple other important clients including Campbell's Soup and Marriott. Meanwhile, WPP faces a significant threat to the Deutsche Telekom account, currently in review out of Mediacom. German trade press is reporting that part of the business is expected to move to Mindshare, but rival agencies may also be in the frame. Yet Mindshare also lost its North America client, the luxury retailer Nordstrom, to independent agency Camelot Marketing. Yet another loss for WPP, on the creative front this time, was Papa John's Pizza, which is transferring from Grey to indie agency Laundry Service.
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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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