April 16, 2018
The news of Martin Sorrell’s resignation signals a crisis for WPP; its stock dropped 7% Monday and further fueled discussion of breaking up the company into smaller pieces. But rather than bend to the pressure of market volatility, WPP should take this rare moment of reflection to reinvent itself. Sorrell’s resignation ends an era, but paves the way for opportunity in the form of new leadership and a renewed vision. The world’s largest agency holding company should become the world’s first integrated global agency.
WPP doesn’t need a replacement — it needs a vision for today’s market
WPP’s board says it will consider internal and external candidates. However, filling the CEO role internally doesn’t go far enough. Multiple holding company executives have told Forrester that egos, P&Ls, and institutional thinking about individual agencies stand in the way of holding companies embracing significant change. One CEO says, “It’s very frustrating when your leaders don’t think about the good of the broader company and client relationship.” WPP should look outside the company, if not outside the industry, for a leader with vision.
Imagine a WPP run by an executive not already conditioned by agency culture? Sheryl Sandberg? Tim Cook? Reed Hoffman? Jeff Bezos? Appointing a leader from a tech giant would leapfrog the world’s largest advertising agency out of the age of the brand and into the age of the customer. They would bring a “fail fast, fail often” philosophy, a fresh set of customer experience skill sets, an instant recruiting pipeline, ideas for new structures and new products, and a path to build WPP’s M Platform into a next-generation customer experience database platform.
The first truly integrated global agency
Selling off WPP assets would not help client or shareholder value. Selling to a consultancy would result in conflicts with Group M’s media business and the consultancy’s auditing business. Agency creative cultures would struggle inside a consultancy’s organizational constraints. A holding company sale would require years to work through overlapping capabilities, affecting client service during and likely after the “merger.” Neither a consultancy nor a holding company sale would translate into long-term shareholder value; it would just be a short-term opportunity to recoup some losses.
The best option for clients, shareholders, and employees is for WPP set a vision to become the first truly integrated global agency. All of the pieces are already in place, including consulting, media, creative, digital marketing, and asset management. The issue is that the pieces compete or selectively work together. WPP’s new leader should strategically trim the excess, permanently combine “horizontal” client teams, and collapse competing verticals into a single WPP. In doing so, they would create the first integrated global agency. Clients would have a more stable partner, and the agency world would finally have a model to compete with global consultancies at scale.
WPP can turn crisis into opportunity by finding the right leader and renewed purpose.
If you’re interested in learning more about this topic, watch for my upcoming report on agency holding companies, coauthored with Ted Schadler. In the meantime, feel free to email me at email@example.com.