An Interview with Sir Martin Sorrell

By Matt Van Hoven Comment

A few weeks ago, we asked you to tell us what you would ask WPP CEO Sir Martin Sorrell if given the chance. Well, 54 of you submitted questions that covered it all. And as much as we’d like to ask him all 54, we narrowed it down to 10.

With no further adieu, here’s what he had to say.

Question 1: How do you see the events of the past year effecting your standing among the other holding companies and what do you think is going to be the dominant trend coming out of this recession?

Sir Martin: “Can’t speak for others, but we now have a clearly different positioning and strategy, which has been in position for at least the last 10 years and which some have tried to imitate recently.

First, were focussed on the brics and next 11 markets, already 25% of our almost $15 billion of revenues; second, were focussed on new media, also almost 25% of our revenues; and thirdly, on consumer insight, which totals over $4 billion or approaching 30% of our reveunues.

Our targets are at least a third of revenues for each (there is lap-over or cross-over). This is a clear difference both in terms of function, geography and size to other parent or holding companies. As we emerge from this vicious recession, these strategic strengths will become more important and differences will grow.”

Question 2: What’s the future for large communications holding companies such as WPP in a fast, nimble, social media world?

Sir Martin: “Our company is not one monolithic, elephantine company. If you look at our web site or annual report, you’ll see we have over 100 brands, basically because there are some perceived and actual diseconomies of scale in creative businesses like our own industry (such as the perception of size itself and client and people conflicts), but not media buying. In essence, we have about a dozen major brands.

In fact, new media and social networks, in particular, have been and will be an opportunity, not a threat. They’ve enabled us to become closer to the consumer and learn more about their media habits and the changing media market place. Interactive dialogues have enhanced our understanding of the consumer and have enabled us and will enable us to target more and more effectively. Application of technology and use of data have become more important resources and skills for us, alongside the core skill of creativity, in its broadest sense ie beyond just traditional media and the 30 second tv commercial.

For example, we’ve seen major new ways of growing our public relations campaigns through social networks and communities and polling. Editorial publicity has yet again been highighted [sic] as even more important than paid for publicity.

We’ve also seen social networks and new media, such as mobile and video, catalysing the opportunities for consumer insight, advertising, branding and identity, healthcare and other areas.

This doesn’t minimise the need for us to be flexible, responsive, quick and entrepreneurial &#151 all the more in these difficult times for our clients. Big agencies have the advantages of breadth and depth of planning, creative and executional skills. Smaller agencies have the advantages of speed and responsiveness. We have both big and small.”

Question 3: What are your plans for the future for JWT Inside, the employment communications arm of JWT. There continues to be layoffs and the hiring picture in the US is bleak.

Sir Martin: “Employment advertising is structurally and cyclically challenged at the moment, to say the least. Craigslist and other on-line “free” competition is very tough and traditional classified press media have paid the price.

However, the opportunites [sic] for internal communication grow and grow, even in difficult times, as chairmen and ceos wrestle with the need to communicate strategy and structure not only externally, but internally too. We will continue to seek to expand our capabilities in these areas, but employment advertising in old media continues to be challenged, particularly in mature western markets. We need to expand our capabilties [sic] even further in new media.”

Question 4: If people are the backbones of your companies, how do you show them that you and your company actually care? And by care this includes not just as people, but also professionally, in their career growth, therefore enabling success. I am sure most get lost in the shuffle of the giant conglomerate- why stick around?

Sir Martin: “It is going to be particularly difficult in 2009. Our biggest investment is in people. As a group, we invest around $9 billion in people each year, which compares with only about $300 million on capital expenditure. Often feel we spend more time on the latter, than the former.

In 2009 there are still going to be functional and geographical areas that grow like brazil, china, india, many of the next 11 markets, new media, consumer insight, where we will be investing more and areas like usa and western europe where we will be reviewing our investments, as revenues decline, at least in the short-term.

Strategically and in the long-term we offer not only the most interesting national, regional and multi-national creative opportunties [sic], but exposure to the strongest faster-growing markets, new media and consumer insight challenges too. Apart from stronger career opportunities, there are extremely powerful training opportunties [sic] such as maestro, formerly leading the firm and brand leadership courses. Similarly, look at our site for the wpp partnership, atticus, and wpped cream awards.

As a result, a large number of our agencies have been voted as the best places to work in both western and eastern markets.”

Question 5: Do you see a strategic advantage or disadvantage in the trend of cutting senior talent (i.e., their salaries and experience) to acquire junior talent?

Sir Martin: “Not sure that’s the trend in the industry. If you have to cut, the key is to keep it balanced. Not just in the sense of the question &#151 senior and junior – but geographically and functionally too. The increasing client demands are going to come from the faster growing functional and geographical markets. Its all a question of balance and not doing what seems to come easiest ie focussing on junior people or people in far off places.”

Question 6: What do you say to your critics that believe you undercut on price and figure out how to make a profit later?

Sir Martin: “Nonsense &#151 sounds like sour grapes.”

Question 7: What has been your biggest failure as CEO and what did you learn from it?

Sir Martin: “There are failures every day. The biggest one was probably in the recession of 1990/91, when I over-geared the company following the acquisition of ogilvy. I didn’t understand that a convertible preferred stock in a recession was debt not equity.

The lesson &#151 make sure it doesn’t happen again.”

Question 8: Why has not a single Chief Creative Officer or agency CEO been let go in this time of mass layoffs? Where’s the big statement fire? Somehow the heads of JWT, Ogilvy, and Y&R in every single city have kept their jobs. Why?

Sir Martin: “First, although there have not been “mass-layoffs”, there have been ceo and cco changes, where appropriate. In 2008, the total number of people in the company rose by about 4,000 or 4%. Where revenue growth varied, rates of growth or decline varied too. If 2009 revenues are stable, I would expect the number of people to remain stable. The question seems to focus on our brand advertising business, which is now approximately $3.5 billion of revenues out of total revenues of almost $15 billion.”

Question 9: Aside from the economic opportunity you saw years ago, do you genuinely love advertising and marketing? What campaigns do you like?

Sir Martin: “I genuinely do, particularly as its such a fun, varied, diverse, merotocratic [sic] business &#151 that is you’re only as good as your last idea. Its like sports or entertainment. There are few barriers to entry and the effective creative idea (not just tv advertising) is the entry point. There are few industries that have such limited hierarchies. Experience is no barrier to entry.

It would be unfair to single out any campaign in particular, for obvious reasons, but, as long you don’t tell anybody, I do love a norwegian ad for a language school – one of ours, I am afraid.”

Question 10: WPP’s integration is different than your average corporate integration, it’s not really horizontal or vertical. It’s a bit of a hybrid and it seems that the core benefits (risk aversion and efficiency, respectively) of these types of integration aren’t realized in this type of hybrid model. I can only assume that the reason why WPP subsidiaries aren’t fully merged is to avoid roster conflicts. Has this inability to leverage a major competitive advantage actually become a weakness or threat to WPP because of additional executive staffing requirements that are not typically seen in smaller agencies?

Sir Martin: “The integration is both horizontal and vertical, where appropriate. Our brands have to compete and co-operate, kiss and punch.

As explained above, there are perceived diseconomies (by clients and people) of scale in all creative businesses and there are real diseconomies of conflict for client and people reasons.

What has become apparent in the last few years is that clients want access to all of a groups resources, not just those of one brand. Why have access to only 10,000 talented people, when you can have access to over 130,000. This started with accounts such as hsbc and vodafone and migrated to samsung, bank of america, p&g, ford, dell, j&j pharma and hp. Increasingly, the parent companies or holding companies are becoming the full service agencies of the 21st. Century. This is the major and unparralleled opportunity.

Given wpps unmatched resources, it is a particularly attractive opportunity and shift in client demand.”

And there it is. A big thanks to Sir Martin for taking the time, and all of you for submitting your queries. Comments are open.

More: “What Would You Ask Martin Sorrell? Yeah. You.