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 reaching a record high of $19.4bn in 2016. However, a sharp downturn in performance during 2017 was followed in early 2018 by an allegation that WPP's creator and CEO Sir Martin Sorrell had misused corporate assets, a charge he strenuously denied. With WPP's share price already in freefall, Sorrell stunned the global advertising community by resigning from the group he had assembled almost single-handedly over the space of 33 years. WPP owns four of the world's largest advertising agencies in J Walter Thompson, Ogilvy & Mather, Young & Rubicam and Grey. These are partnered by three global media networks Mindshare, Mediacom and Wavemaker, 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 largely avoided large acquisitions in recent years, WPP continued steadily to expand its portfolio in the 2000s, 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
|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 6th Sep 2018: WPP finally confirmed Mark Read as group CEO and permanent successor to Sir Martin Sorrell. It's undoubtedly the right choice in the circumstances, bringing continuity and stability to the group following several months of uncertainty. Andrew Scott, who has been co-COO of WPP with Read since Sorrell's departure, will remain as chief operating officer. Read's appointment came a day before - finally - the release of WPP's results for 2Q. It was the last of the major groups to report. These showed a modest - very modest - improvement in performance, and the first like-for-like increase in sales for more than a year. Total revenues for the quarter were up 2.4% on a LFL basis (WPP's equivalent to organic growth reported by other groups) to £3.94bn. Net revenues less pass-through costs rose a less impressive 0.7% for the quarter to £3.20bn. WPP's weak point has been North America, where net revs less pass-throughs slumped 3.3%, offsetting solid 3.9% growth in Western Continental Europe. The UK was also lacklustre at 1.4%. Combined growth in other markets was 2.9% overall, with Latin America especially strong at 8.6% and mainland China up 9.0%. In terms of revenues by sector, data investment management - in other words Kantar research - was once again the weakest performer, reinforcing the likelihood that this business might be divested, as has been widely speculated. "As chief executive," said Read, "my focus will be on invigorating our company and returning the business to stronger, sustainable growth. Our review of strategy is underway, addressing our structure, our underperforming operations, particularly in the United States, and how we position the company for the future. We will provide an update by the year end." Despite the challenges on the topline, profits remained buoyant, primarily as a result of exceptional one-off gains from the sale of WPP's stakes in Globant, AppNexus and other part-owned businesses. Operating profit for the first half - a quarterly figure was not disclosed - was up over 16% and net profit by over 11% to £705m.
With all 2Q results now in, here's the current ranking for organic growth (or decline) in 2Q. Dentsu 5.9%, Interpublic 5.6%, WPP revenues 2.4% Omnicom 2.0%, WPP revenues less pass through costs 0.7% MDC -1.7%, Publicis -2.1%, Havas approx -4.1%.
Adbrands Weekly Update 16th Aug 2018: WPP is to depart its corporate HQ in London's Farm Street after more than three decades in residence. The office was originally part of J Walter Thompson, WPP's first big acquisition back in 1987. The move is seen as an attempt to make a fresh start following the departure of Sir Martin Sorrell, with whose tenure the Farm Street office is indelibly associated. The group will begin the search for a new HQ immediately; in the mean time, WPP will take up temporary residence in Sea Containers House on London's South Bank, alongside Ogilvy.
Adbrands Weekly Update 9th Aug 2018: WPP also got a much-needed confidence boost from Mars, which has consolidated all global media with the group's Mediacom network. Previously, the global account had been split three ways with Mediacom responsible for planning, while Publicis-owned Starcom and Zenith and Omnicom's OMD handled buying in around three-quarters of local markets, including the US and China and much of Europe. Combined billings are worth around $1.8bn annually. Meanwhile, Mondelez concluded another set of regional media reviews. This too yielded a significant dividend for WPP's GroupM media division. Dentsu Aegis Network's Carat retained the business in the UK & Ireland, but was replaced by Mindshare in Australia & New Zealand; by Wavemaker in India and another as yet unidentified WPP agency in Japan. Publicis-owned Spark Foundry wins the business in China and South East Asia.
Adbrands Weekly Update 2nd Aug 2018: WPP was reported to be in talks to sell a 20% stake in its collective agency assets in China to a consortium comprising local online giants Alibaba and Tencent and private equity firm China Media Capital (whose founder Ruigang Li is also a non-executive director of WPP). If the deal goes ahead, the group's local operations would be hived off into a separate legal entity, WPP China, minority owned by its new partners. The deal would not be entirely without precedent for WPP. Its operations in Australia & New Zealand are also a separate entity, publicly quoted and minority owned by local shareholders. Separately, WPP sold off its sports marketing unit IEG for an undisclosed sum to rival agency Engine Shop, a subsidiary of Bruin Sports Capital. It is the latest of a series of small disposals of non-core assets, including minority holdings in adtech firms Globant and AppNexus.
Adbrands Weekly Update 2nd Aug 2018: Shell confirmed the results of its global marketing services review, already leaked a couple of weeks ago on an unconfirmed basis. WPP retains the lion's share of the business. However, as had been expected J Walter Thompson will surrender its hold on the downstream business, which covers oils and lubricants as well as the company's global service station network. Most of that business transfers to VCCP - a big victory for the Chime-owned agency, but not a complete disaster for WPP, which still has a minority stake in Chime. JWT retains Shell's corporate branding business; Mediacom retains media; Wunderman gains a larger share of CRM and digital, aided by Geometry and JWT's digital arm Mirum, in a newly created "Agency of the Future" dedicated construct. The biggest non-WPP addition to the roster is Omnicom's Doremus, which will manage B2B marketing. Edelman remains Shell's lead PR agency, but WPP's H&K Strategies joins the roster as well.
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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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