No other holding company has had its CEO as ingrained as WPP.
Now WPP must keep its massive organization, with so many disparate agencies and pieces, together without Sorrell.
“He was important not only as the voice, look and feel of WPP, but he was very much involved in the day-to-day operations,” said Rebecca Lieb, analyst and founding partner at Kaleido Insights. “WPP is made of so many different brands and agencies with different agendas, personalities and leaders, it’s going to dissipate that glue at the top that holds them all together.”
While many employees within WPP have strong opinions and leadership qualities, Lieb said she doubts the new leader will have the “charisma, influence and power” Sorrell had.
“Martin was the personality of WPP in every sense of the word,” agreed David Jones, CEO of brand tech group You & Mr Jones and former global CEO of Havas. “He was an outspoken character in a fairly bland holding company. Now that he’s gone, you’re just left with the fairly bland holding company.”
Jones likened WPP’s future without Sorrell to a steering a ship through icy waters without its captain.
“The shareholders and clients are all still on board, you have two people holding the steering wheel who've never captained a ship before and there isn't enough time to avoid the iceberg anyway,” he said.
But others, including Forrester principal analyst Jay Pattisall, are more optimistic – and see Sorrell’s departure as the start of a new future.
“It’s a rare moment in time that they can reflect back who they are and what they’re going to be,” Pattisall said. “What they were doing began 33 years ago, and this gives them a bit of a clean slate to march forward.”
Righting the ship
To get back to growth, WPP will have to evaluate the way it approaches paid media and agency responsibilities in the context of changing client needs.
“What really needs to be examined here is the era of the enormous holding company,” Lieb said.
This, of course, is something WPP (and the rest of the major holding companies) have been working on for years. Each has been reorganizing its assets to create more nimble, client-centric service models and easier access to disciplines that previously existed in silos.
And while Sorrell had been executing on that vision – WPP has 52 client-centric, cross-discipline teams, more than any other holding company – he wasn’t doing so quickly enough.
“He made great steps forward, but I don’t think they went far enough,” Pattisall said. “Someone needs to come in and radically affect that change.”
WPP’s ability to change rapidly will depend on its new leader. While possible successors being floated are WPP careerists, an outsider could be more effective in forcing change while also attracting fresh talent in areas like technology and data science. Bringing on recruitment firm Russell Reynolds to help it find a new leader could be a sign that WPP is looking for an outsider.
WPP would do well with a tech luminary of the likes of Sheryl Sandberg or Tim Cook, Pattisall said.
“They need an outside perspective,” he said. “That type of mindset and vision, someone that is not conditioned by agency culture, would be amazing for WPP.”
Greg Paull, principal analyst at R3, agreed that a digital-centric leader is a necessary step forward.
“They need to really embrace, not just pay lip service to, digital and data, which is quite frankly what they are doing now,” he said. “They have a lot of assets in digital and data, but they haven’t necessarily leveraged them together.”
A possible break-up of WPP has been reported, or at least a sell-off of its non-core assets such as Kantar. But a sell-off strategy would hurt employee and shareholder morale more than it would help the company grow, Pattisall said.
“There may be portions of the company which they could strategically collapse into other entities, or pieces they just need to trim,” he said. “But selling off large swaths of the company as a way to recoup shareholder value is short-term thinking.”
Jones, however, says a sell-off is likely – especially if WPP doesn’t want to risk installing a leader willing to make big bets. And with Roberto Quarta, known for ruthless corporate cost-cutting, on board as interim CEO, that risk-taking strategy seems even less likely.
“The problem is doing that reduces both their revenue and profits,” Jones said. “They make the vast majority of their money in the old model and delivering those same services for a lot less accelerates the decline of their business.”
Regardless of what model WPP chooses, it needs a very different approach to the way it has operated for the past 33 years to survive.
“Growth in the old model is going to be very hard to come by,” Jones said. “There is no point in trying to just win more share of a declining market.”