Sir Martin Sorrell may have been a global media figure, as WPP ‘executive’ chairman Roberto Quarta used to explain when justifying Sorrell’s outsized salary. Yet his departure was barely noticed in the American press.
Only the Wall Street Journal, where the witch hunt against his leadership of the world’s largest advertising firm began, showed interest.
Lack of detail as to what led to the rapid departure from the job Sorrell dominated for 33 years will continue to fascinate with the media hoping for salacious information. Washington is the home of damaging leaks so it will be intriguing as to whether American super-lawyers WilmerHale are able to keep the lid on.
Sir Martin Sorrell’s departure was barely noticed in the American press
The fact that WPP felt it had to pay up Sorrell’s contract, worth £19million, suggests nothing too dreadful. If anything else proves to be the case noisy big battalion investors will want a say.
Sorrell had allies in the financial press but was much less popular among newspaper publishers. Sorrell is blamed for his iron grip on media buying and speeding the decline of newspaper advertising with his advocacy of digital and a data crunching platform which directed advertisers to Silicon Valley platforms.
Paradoxically, this played a part in Sorrell’s downfall. Investors were puzzled by the fallen chief executive’s dizzying array of takeovers of online outlets. In focusing on digital investment Sorrell underestimated that his old-line ‘Mad Men’ agencies, such as J Walter Thomson and Ogilvy & Mather, needed more care and attention.
This should be a priority for joint chief operating officers Mark Read of WPP Digital and Andrew Scott of WPP Europe.
Both will doubtless have their hats in the ring for the top job but the City will require fresh blood, which is why names such as Jeremy Darroch of Sky have loomed into view. But a financial engineer might be what is really needed.
Investors are confused. Yes, they wanted to see the back of Sorrell but the restructuring likely to follow will be complex and expensive. The board will want to avoid a fire sale of assets, such as market research arm Kantar, for fear of not getting full value. Creating new global teams across all agencies is fine idea but dismantling existing structures will result in huge costs. WPP already has spent up to £500m on this and barely made a difference.
WPP is selling services into a retreating market. Procter & Gamble has cut advertising budgets and Unilever is learning in China how effective it is to go directly to the consumer, cutting out the middlemen in the shape of media buyers and agencies.
WPP stock resumed its fall in latest trading. Sure there are valuable parts to be split off, polished up and sold. But challenges for traditional advertising are overwhelming.
Well, that was short-lived. Before the weekend, markets were dominated by geo-politics with the strikes on Syria and the prospect of a deeper conflict with Russia driving the oil price up 10 per cent.
Britain may still be fearful of worsening relations with Vladimir Putin. In the American media it is another conflict, between Donald Trump and his former FBI director James Comey who accuses the president of being a ‘serial liar, a ‘stain’ on all he deals with and morally without scruple.
The price of Brent crude futures has slipped back 5 per cent to $71.75 per barrel
Regime change in Washington is of more concern than in Damascus.
With the pressure temporarily off in the Middle East the price of Brent crude futures slipped back 5 per cent to $71.75 per barrel.
Confidence in the US energy sector is buoyant in the back of firmer prices. It reports seven new US rigs coming on stream in recent months bringing the number of sites to 815 – the highest since March 2015.
Parliament may vent its spleen and Congress is vaguely dissatisfied about not being consulted on cruise strikes. But markets look reassured that all-out Middle East war is off the table for the moment.
Creative Britain continues to score in the US. The arrival on Broadway of Harry Potter and the Cursed Child is causing as much excitement as Hamilton in London.
Bringing the drama to New York has run up costs of $68.5 million (£48.9 million) including a bill of $33 million for reconfiguring the Lyric theatre. Previews already have brought in $2.1 million (£1.5 million) of ticket sales.