Martin Sorrell Vs. Glen Hartman: What Exactly Is A Holding Company, Anyway?

Martin Sorrell went on the attack in a fireside chat with Accenture Interactive senior managing director Glen Hartman.

The S4 executive chairman fixated on Accenture’s operating and incentive structure and how much autonomy creative agencies maintained within its network.

“Accenture talks about one P&L,” he said during the session at AdExchanger’s Programmatic IO New York. “I, looking at Accenture from the outside, find it pretty difficult to believe. What you’re actually doing is exactly the same as WPP, Omnicom and Publicis.”

Sorrell wanted to know if employees of Droga5, for example, which Accenture bought in April, will consider themselves a part of Droga5, Accenture Interactive, or Accenture.

“At WPP we had difficulty getting people to think about one firm,” he said, acknowledging the shortcomings of his horizontality strategy, which didn’t offer the right incentives to get agencies to work together.

Hartman, dodging the question, said the agency world is too caught up on internal models.

“Who cares if it’s a holding model or a single P&L?” he said. “It’s a very internal way of thinking and I think it’s a problem in the industry.”

To that, Sorrell made a compelling point: “What I care about is, I want my bonus.”

Experience

Sorrell also hounded Hartman on Accenture Interactive’s deliberate distancing from the media business. While the group will buy media to the extent it fits within a client transformation project, it doesn’t want to own a bunch of media agencies.

But if Accenture Interactive was willing to shell out a whopping $475 million for Droga5, why not just buy GroupM or Publicis Media, which drive huge revenues for their holding companies?

“The biggest part of the experience is media,” Sorrell said. “The number of diamond clients you’d earn, and I’m sure you’ve looked, it seems to me this is an area where there’s real opportunity.”

Hartman retorted that the discussion they were having was about “opportunities for agencies to grow in the current format.”

“We are doing something completely differently,” he said. “We think the most important part of the experience is whatever the customer says it is.”

But Sorrell, who has spent his career trying to engineer the right operating model for an agency conglomerate, argued that media is the area where clients are making investments “whether you like it or not.”

He also argued that if Accenture Interactive really wants to focus on creative, its current strategy of buying small agencies isn’t the way to do it.

“I do not believe that you will be able to do the creative by buying these bits and bobs,” he said.

Zed BB

Beneath all of the talk about agency models and services, Sorrell really had a bone to pick with Accenture about the zero-based budgeting strategies it’s implemented with clients like Unilever that’s led them to slash marketing budgets.

“I was at Unilever with Keith Weed on the day Kraft Heinz made their $145 billion bid,” he said. “What was I doing with Keith? I was talking about the implications of the 1 billion euro zero-based budgeting program that Accenture initiated with Unilever.”

While Sorrell acknowledged it’s not the Accenture Interactive division running ZBB programs, he noted they’re much more profitable for the group than a $5 million to $20 million marketing project.

“You’re running a $150 billion company with $43 billion revenues, and the market expects you to grow that by 7% to 8%,” he said. “That’s a big burden. Good luck. I’ve tried it for 33 years. It catches up to you.”

 

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