Is Martin Sorrell such an integral part of WPP that the advertising giant won’t be able to survive without him?
That’s the opinion of L2 founder and NYU business professor Scott Galloway who told CNBC that Sorrell “really defined the modern communications era.”
That said, Galloway added that conglomerates tend to perform poorly compared to single brand companies, which is why he believes WPP will be broken apart, most likely in the next 24 months.
What that says about conglomerates on the client side I’m not sure. What is certain is that CPG giants like Unilever and P&G have been putting the squeeze on their agencies, including a number in the WPP camp, and saving hundreds of millions in the process. That of course is part of WPP’s problem and why it had such a terrible 2017 and perhaps part of the reason that Sorrell is now out.
Galloway also slammed WPP’s “failure of corporate governance” citing the fact that Sorrell is free to set up a competing entity anytime he chooses.
Of course not everyone believes that WPP will dissolve post Sorrell. UK investment firm Liberum issued an investor note yesterday suggesting the firm may dispose of some assets—research firm Kantar and the WPP PR shops being the most likely candidates—while the rest of the group remains intact. According Liberum such a strategy “should drive a closing of the gap between the valuations and performance of WPP and the other Agencies.”
Liberum for one, doesn’t think Sorrell, 73, will try to set up a competitor to WPP. Age is a factor, “but, more importantly, WPP is his creation and he would not want to do anything that would be seen as damaging the company.” Sentiment aside, Liberum notes Sorrell is still a significant shareholder in the firm.
But in his CNBC interview Galloway opined that Sorrell isn’t done yet. Noting that the former WPP chief and his wife recently had a baby, he asserted, “this is not an individual looking to hang up his cleats.”
Greg Paull, principal R3 Worldwide likened Sorrell’s departure to “Bezos leaving Amazon or Zuckerberg leaving Facebook…Finding a replacement is going to be harder than Publicis Groupe last year or IPG in 2005. He alone held all the infinity stones that keep the place running.”