When Martin Sorrell made a hostile bid for JWT in 1987, nobody could believe that an ad agency could be the victim of a takeover. Largely because agencies were held together by loyal clients who could object to new owners if they thought them inappropriate. JWT at the time was doing badly in financial terms with gross margins of less than 5%, which were perhaps the most embarrassing agency margins in New York.
Sorrell at the time was confronting a company several times WPP’s size. Besides, while he had been chief of Saatchi and Saatchi, a job he quit in 1984, Sorrell had no previous experience of running a firm as large as JWT. To his credit, the financial turnaround at JWT was quick and methodical. But we saw some of our people leave the agency, particularly the planners and other intellectuals. But Sorrell felt that the thinning of the management ranks would do JWT good, and perhaps it did. But in many ways, it also destroyed the soul of the company as the ‘thinking’ agency. Who would have thought that this was the beginning of the takeover spree by Sorrell? Ogilvy was next, although it was that he may have paid too much for Ogilvy and that it would be his downfall.
Compared to the $566 million that Sorrell paid for JWT in 1987, Ogilvy was acquired at $ 864 million in 1989. Although perhaps a little smaller than JWT, Ogilvy was the agency with a better creative reputation thanks to David Ogilvy its founder. With two of the best ad agencies under his belt, there was no stopping Sorrell.
While he was responsible for making the advertising industry more profitable, he might have destroyed the spirit of the industry forever. The entry of bean counters into the advertising business was not well received those days. David Ogilvy called him an “odious little shit” who had “never written an advertisement in his life.” But to Sorrell’s credit, he learned about the advertising business quite quickly. When I heard him speak in the 90s it was difficult to imagine that Sorrell was a finance man. He seemed to have grasped the essentials of the advertising business and was making good sense to clients.
But internally people at his agencies found him autocratic and dominating. He took all the decisions, leaving none for others. Not always pleasant, I remember once before presenting to him he told me “your neck is next on the chopping block”. If this was British humour I may have missed it, in spite of being brought up on a steady diet of P G Wodehouse in my youth. It certainly wasn’t a pleasant way to start your presentation.
Sorrell in his 31 years since he first pitched for JWT has, of course, transformed the advertising business. More WPP revenue comes from media, research and data than from the traditional ad agency business something that he was proud of and referred to as the transformation of Madison Avenue from “madmen to ”. Something that might be real but which has also taken the romance out of the advertising profession. But to his credit who would have thought that the British could have led an assault on Madison Avenue. He was not a likable guy but one has to salute his achievements.
With Sorrell leaving, speculation must be rife on who will take over. In my mind, the biggest question is whether the successor is a mathman or a madman. That might make all the difference to how this industry goes into the future.
Sorrell leaving might be a good lesson for Indian CEOs. The mighty should step down before they have to.
First published in mxmindia.com on April 15, 2018