WPP CEO Martin Sorrell broke his silence today about the resignation of J. Walter Thompson Global CEO Gustavo Martinez after the agency's chief communications officer Erin Johnson filed a sex harassment lawsuit.
Sorrell addressed the Martinez affair and other issues in an interview that was conducted by author/journalist Ken Auletta Wednesday afternoon via videoconference at the 4As Conference in Miami. Sorrell was originally scheduled to appear in person but had to change plans due to a conflict.
For now, Sorrell said, he is standing by Martinez and stressed during his 4As talk that the charges in Johnson’s lawsuit are only "alleged."
"Whether you believe Gustavo or not has yet to be determined in the court of law. But in the court of public opinion, he has been judged and found guilty. It was in the interest of the company that he be replaced," said Sorrell, adding that the decision to resign was mutual.
Sorrell said that Johnson requested to be placed on leave, but added that she is welcome to come back. "Whether she wants to come back is up to her."
The WPP chief said he takes offense with the chatter that this alleged sexist and racist behavior is pervasive at WPP, though he believes the industry and his holding company need to do a better job of integrating its workforce. "LGBT, transgender, Hispanic, all are unacceptably low," he says.
Sorrell also disagrees with his rival Maurice Levy, CEO Publicis Groupe, who claimed during his keynote speech at the 4As Tuesday that Martinez's alleged behavior was more of a one-off. "I disagree violently with that admission. Maurice has the habit of ignoring the facts in getting to his opinions."
Moving to other topics, Sorrell said he "does not see the point" of the Association of National Advertisers' investigation into allegations of agency rebates or kickbacks saying it is "not the right thing." He said that WPP is addressing these concerns internally.
"In the case of media buying, programmatic and online, we have changed [our] approach," he says. When it comes to premium inventory, WPP decided to switch to an opt-in basis and clients are now able to define the inventory and then decide whether to participate or not. This meant tearing up all of the old contracts and giving the option to clients to sign on to new ones.
He believes more focus needs to be on the "tension" between "technology companies masquerading as new media owners" like Google, Facebook and others. There's no transparency with the algorithms and these shops work on margins that can be 50% to 100%, much higher than WPP’s own 15%-17% margins. He points out the significant investment WPP makes with Facebook and Google, yet they are directly competing with his agencies.
Sorrell said he feels his company is positioned for the future given its embrace of technology and its heavy investments in data management and content development.
Unprompted, the British citizen also offered his thoughts on the upcoming U.S. Presidential election. Donald Trump “will not win the election” he asserted because “the nature of the people are changing significantly," adding that multiculturalism and the youth vote will play a key role in the political outcome.
"What we call the new mainstream [is] now the mainstream. They are in the majority. From a practical point of view, the growth in the U.S will come from the new mainstream."