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Post-CEO Scandal, What Happens To The World’s Largest Ad Agency Company?

A major break up? Gradual tweaks? Somewhere in between? There’s no consensus on just what WPP CEO Martin Sorrell’s sudden resignation will bring.

Post-CEO Scandal, What Happens To The World’s Largest Ad Agency Company?
[Photo: Financial Times/Wikimedia Commons]

Perhaps it was an overactive penchant for the dramatic that led WPP to announce the immediate resignation of long-time CEO Sir Martin Sorrell on a Saturday, following an internal company investigation into allegations of personal misconduct.

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Behind the hastily cobbled together tributes to, and hot takes on, the 73-year-old Sorrell was what felt suspiciously like an exhale that couldn’t decide whether it was out of relief or despair. Sorrell, who took WPP from a shopping cart maker to the world’s largest advertising agency holding company over the last 33 years, was a giant figure in the industry. His departure for many will symbolize seismic change for WPP and the overall ad holding company model of acquiring ad agencies of varying creative cultures, skillsets (digital, research, media buying, and more), and geographies, to offer major marketers access to more coordinated global capabilities. Meanwhile, others maintain that WPP’s business is so large that it will be more of the same, at least in the short term.

The only consistent sentiment is that no one can seem to agree on what outcome the major leadership change will ultimately yield.

For its part, the company said in a statement that Sorrell’s departure is being treated as a retirement and that Roberto Quarta, WPP’s chairman, will become executive chairman while a search for a permanent successor is underway. Mark Read, chief executive of WPP agency Wunderman, and Andrew Scott, WPP corporate development director and chief operating officer, Europe, have been appointed as joint-chief operating officers of the company.

Cenkos Securities media analyst Alex de Groote told Campaign that the question of who would succeed Sorrell at as WPP CEO was a “red herring,”  because shareholders want to break up the company into its valuable separate divisions, worth more than WPP’s current share price, down by more than 40% from its February 2017 peak. If WPP did break up, de Groote predicts all the other holding companies, like Omnicom, Interpublic Group, and Publicis Groupe, would break up within the next year and a half.

At the other end of the scale is Pivotal Research analyst Brian Wieser, who wrote in a note to clients, “We don’t expect much disruption as individual business units will continue to push forward on their individual business plans, and the centralized back-office functions of the holding company will likely continue to support margin improvement.”

Behind all the beer commercials, brand tweets, and sponsored Snap lenses we see as consumers, there’s no denying the ad business is in flux. And holding companies like WPP are working feverishly to maintain both the fiscal strength and creative operations advantage that made them so dominant over the last two decades. However, that model has been under pressure in recent years from a convergence of factors, including consultancies like Accenture and Deloitte pushing in on their turf, client demands for increased spending transparency, and digital ad competition from the likes of Google, Facebook, and Amazon.

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Deb Giampoli, a consultant and former director of agency relations for Kraft Foods and Mondelez, told AdAge, “The future success, or not, of WPP is more a function of how it and its agencies will evolve to meet the changing needs in the industry and less a function of who’s running it.”

Even Wieser sees the need for WPP and the holding company model to evolve sooner rather than later. “It could very well be that anyone who might follow Sorrell on a full-time basis would bring new ideas to the holding company and lead the rebound that we think will eventually occur,” he wrote.

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About the author

Jeff Beer is a staff editor at Fast Company, covering advertising, marketing, and brand creativity. He lives in Toronto.

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