Adland

by Mark Tungate

  The takeover of the legendary American agency brand was plotted from an unlikely base in London. At that point, Sorrell and Rabl were still working in a basement office in Lincoln’s Inn Fields. ‘The place was quite modern, reasonably trendy; let’s not exaggerate. But it was below road level and whenever it rained the water would pour in. In the middle of the JWT bid we had plasterers in repairing the wall to keep the damp at bay.’

  Sorrell had taken a look at J Walter Thompson and seen its potential. There was still the great brand name. It would make WPP genuinely global, opening the door to Asia. Plus, it remained strong creatively in London and New York. But profit margins were shrinking and Burger King, a major client, had just put its account up for review. Initially, WPP built up a 5 per cent stake. This escalated into the advertising industry’s first hostile takeover, which Sorrell finally pulled off in June 1987, after just 13 days, acquiring JWT for US $566 million.

  But there was another, unexpected fillip to the deal. Half-buried on J Walter Thompson’s balance sheet was a freehold property – a building that Sorrell had assumed to be the agency’s Berkeley Square headquarters. It turned out to be a building in Tokyo, which Sorrell subsequently sold for US $200 million, walking away with US $100 million after tax.

  With that deal under his belt, two years later Sorrell turned his attention to the next agency prize: Ogilvy & Mather. As mentioned earlier, David Ogilvy was far from overjoyed by the prospect, infamously describing Sorrell as ‘an odious little shit’ who had ‘never written an advertisement in his life’. At the time, they had never met. Realizing that the prospect of letting O&M go would be emotionally wrenching for the adland veteran, Sorrell had been half-expecting such a response. He won Ogilvy over by reading and quoting from all his books and offering, in person, to make him non-executive chairman of the merged company. Ogilvy apologized for his comments and their relationship was one of equanimity from that moment on.

  Not so the future of WPP, which lurched like a galleon overloaded with booty. Sorrell had paid US $860 million for Ogilvy & Mather, using debt and preferred stock rather than equity. In the wake of the takeover, O&M lost some senior staff and key clients. And then, in 1991, the recession struck. Analysts issued warnings and WPP’s share price plummeted. Sorrell’s company came close, very close, to going under. He survived only thanks to his, as Campaign put it, ‘forensic knowledge of how banks operate’ (‘WPP at Twenty’, 29 April 2005).

  When I ask Sorrell if he feels that this was a necessary part of the learning process, I can almost hear his knuckles whitening around the phone. ‘No, absolutely not: I would never have wanted to put myself or anybody else in the company through that. I made a mistake, that’s all. If I’d done the deal with half-debt, half-equity, it would never have reached that stage. Our shares were down to about 30p at one point. It was a dreadful period.’

  But WPP clawed its way back to the surface – as did O&M, landing the consolidated IBM account in 1994. WPP grew steadily thereafter, with no dramatic acquisitions for a time. Instead, Sorrell concentrated on his founding principle of knitting together a cohesive range of marketing services operations. ‘Clients want solutions to problems,’ he says, unknowingly echoing Kevin Roberts over at Saatchi & Saatchi. ‘And they want the benefit of access to as many varied solutions to their problems as possible. At the end of the day, I don’t think they care too much about agency brands.’

  This ability to provide solutions was demonstrated in 1997 when Sorrell brought the JWT and O&M media departments together to create MindShare, a unique operation at the time. By 2000, he was ready to net a big fish again, this time securing Young & Rubicam for US $4.7 billion. In short order, WPP acquired The Tempus Group (the former CIA) for £400 million. Admittedly it tried to pull out at the last minute as the markets went into convulsion following the 11 September 2001 attacks; but the negative was turned into a positive with the creation of yet another hefty merged media buying organization. More recently, in 2005, Sorrell bought the Grey Global Group for US $1.75 billion.

  Is this size for the sake of size? You might think so; but over the years WPP has bagged some huge consolidated accounts – HSBC, Samsung and Vodafone, for instance – and its wide range of agencies means that it can work for conflicting accounts, such as Unilever and parts of Procter & Gamble. Additionally, WPP’s diversified portfolio shelters it, somewhat, from the economic cycle. As Sorrell told Business Today, ‘There’s a wave phenomenon that happens in a recession… The thing that gets affected first is advertising and media management; then, public relations and public affairs, next, branding. The… functional spread gives us a little bit of insularity’ (‘Advertising is local, regional and global’, 21 December 2003).

  Today WPP is the world’s largest marketing communications group, with billings of US $7.1 billion, revenues of US $16.1 billion and a staff of around 160,000, working out of 3,000 offices in 110 countries. Alongside the advertising entities mentioned above, its vast box of tricks includes research companies, PR networks, branding and corporate identity specialists, direct marketing outfits and healthcare communications; as well as every imaginable element of the marketing mix, from internet strategy to sponsorship.

  Sir Martin Sorrell remains very much involved in WPP, even to the extent of occasionally being labelled a ‘micro-manager’; something he does not regard as an insult. ‘This is not business, it’s personal,’ he says. ‘I didn’t inherit anything – there was no Marcel Bleustein-Blanchet before me – I built this thing up from scratch. So yes, I’m heavily involved. When you’re this close to something, you don’t behave like a hired gun.’

  No doubt Sorrell realizes that even the most enlightened clients need something to focus on when looking at a vast organization like WPP – and so he provides a figurehead; a brand identity. During a conversation about overseas markets, he mentions that coins featuring the likeness of Alexander the Great have been found in India; ‘one of the earliest examples of branding’. Sorrell plays a similar unifying role within his own empire. The last time I saw him in person was at a Unilever management get-together. He knows that clients appreciate the personal touch. Indeed, although he laments the fact that many clients now regard advertising as ‘an extension of show business’, Sorrell is one of the industry’s few genuinely statesmanlike figures, afforded the sort of respect commanded, in another era, by David Ogilvy.

  It seems not to matter, then, that he is guilty of the great copywriter’s accusation that he has never written an ad. ‘There is creativity in all walks of life,’ he observes. ‘It shouldn’t be assumed that creative directors have the monopoly on it. There’s plenty of creativity in direct [marketing], for example. There are creative financial people. I occasionally get a vague urge to come up with a campaign, but to everyone’s benefit I’ve always resisted. At the end of the day, I am a businessman. Some creative people find the idea uncomfortable, but advertising is a business.’

  During the Unilever event, Sorrell remained in constant touch with the outside world via smartphone. He is famously linked in. ‘It doesn’t matter what time it is,’ Mel Karmazin, the former Viacom CEO, told Fortune, ‘if Sir Martin didn’t get back to me within 15 minutes, I’d call to see if he’d been injured’ (‘Bigger and bigger’, 29 November 2004).

  It is evident that Sorrell works not for riches, but because he adores it. He does not strike tycoon-like postures – outside work, his passions are family and cricket. WPP’s London base is a discreet townhouse in Mayfair, not a skyscraper designed to send a message to those who stand awed at its base. Far from being the austere, driven figure one might imagine, he is surprisingly easygoing. He once observed that ‘hard work isn’t stressful as long as you’re having fun’. But make no mistake: it is fun that Sorrell takes seriously. ‘I feel the same way about WPP that [Liverpool Football Club manager] Bill Shankly felt about football: “It’s not a matter of life and death – it’s much more important than that.” ’

  Interpublic: the horiz
ontal ladder

  Marion Harper, the late boss of McCann Erickson, had a rather different approach to his job. In the midst of an acquisition rampage in the sixties, Harper had a private DC-10 aircraft kitted out like a flying French chateau, with a king-sized bed, a library and a sunken bath. According to Stephen Fox in The Mirror Makers, the plane was part of a small fleet nicknamed ‘Harper’s Air Force’.

  Although his Napoleonic ambition eventually got the better of him, Harper laid the foundations for the very first marketing communications combine. His innovation may be the reason that, today, almost everyone in advertising ultimately works for five different companies. In 1954, he acquired a small agency called Marschalk & Pratt. Feeling that McCann Erickson was already organized along the most efficient lines possible, he was unwilling to embark on a messy, destabilizing merger. Instead, he allowed Marschalk & Pratt to flourish as an independent agency, with separate offices and staff.

  Over the next few years, as Harper snapped up more agencies in varied marketing fields, he maintained the same policy. In 1960, he formed the holding group Interpublic. It was divided into four divisions: McCann-Erickson, to handle domestic accounts; McCann-Marschalk, a second-string agency capable of handling conflicting accounts; McCann-Erickson Corp International, taking care of more than 50 offices around the world; and Communications Affiliates, a collection of below-the-line operations. Harper said that he had taken the ladder structure of the business and ‘turn[ed] it to a horizontal position’.

  In 1961, with the acquisition of London agency Pritchard Wood, Interpublic overtook J Walter Thompson to become the world’s largest advertising company. But Harper’s horizontal ladder also required a delicate balancing act. As the acquisitions continued throughout the 1960s, the structure began to wobble dangerously. Not every client was convinced by the separate agency policy: Continental Airlines, for example, pulled out of McCann-Erickson citing a conflict with Braniff Airlines, which was handled by fellow Interpublic agency Jack Tinker & Partners.

  McCann’s creative successes – notably ‘Put a tiger in your tank,’ for Esso – were being undermined by the instability of its parent company. At that point, Interpublic had 24 divisions and billings of US $711 million – but Harper was unwilling to delegate and there was little coordination of these entities. Interpublic’s debt rose from US $1 million in 1962 to US $9 million in 1967 (WARC profile in association with AdBrands, March 2006). Chase Manhattan Bank agreed to stave off disaster with a US $10 million loan – on the condition that Harper left the company. He was duly ousted by the Interpublic board. A few years later (after a brief, ironic attempt to set up a small creative agency) he left the advertising business altogether. He died in 1989 at the age of 73. But he presumably had time, as he sat on the sidelines, to observe other groups adopting and honing the structure that he had pioneered.

  Interpublic recovered from the Harper era and in the 1980s it went shopping again, acquiring the Lowe Group and Lintas International. In the 1990s it fused Lintas with another purchase, the US independent agency Ammirati & Puris, to create Ammirati Puris Lintas.

  Both entities had interesting histories. Established in 1929, Lintas had once been the in-house advertising department of packaged goods manufacturer Unilever (Lever International Advertising Services). It began to take on separate clients in the 1960s and was eventually spun off as a standalone agency, ending up in the Interpublic stable. Ammirati & Puris was a New York creative agency set up in 1974 by Martin Puris, Ralph Ammirati and Julian AvRutick. Its most famous client was BMW, for whom Puris conceived the slogan ‘the ultimate driving machine’. Briefly owned by London’s BMP in the eighties, the agency was once again independent by the time Interpublic got hold of it and merged it with Lintas.

  Interpublic now possessed the three-agency structure that was becoming familiar throughout the industry; but neither Lowe nor Ammirati Puris Lintas was strong enough to offer a realistic alternative to the mighty McCann-Erickson. So Interpublic engineered another fusion, this time combining Lowe and APL to create Lowe Lintas. Then it went hunting again. It had set its sights on MacManus, the holding company of the DMB&B network – but that was snatched from under its nose by Leo Burnett. Finally, in March 2001, it acquired True North, parent to FCB Worldwide, for US $1.2 billion.

  FCB was a direct link back to two of the most prestigious names in advertising history: Lord & Thomas and Albert Lasker (see Chapter 1, Pioneers of persuasion). In 1942, when Albert Lasker retired from advertising, he sold the Chicago-based Lord & Thomas agency to his three top managers: Emerson Foote in New York, Fairfax Cone in Chicago and Don Belding in Los Angeles. The following year, the agency was reborn as Foote, Cone & Belding. Over the next couple of decades it devised some of the most famous slogans in advertising: ‘Does she or doesn’t she? Only her hairdresser knows for sure,’ for Clairol hair colour; ‘You’ll wonder where the yellow went when you brush your teeth with Pepsodent’; ‘Up, up and away with TWA’… Although its founders had long passed away by the time Interpublic acquired True North – the name of FCB’s holding company – the agency had retained its prestige.

  Unfortunately for Interpublic, however, the acquisition could not have come at a worse time. In 2001 the dotcom bubble burst and the events of 11 September sent the advertising market into a downward spiral. This hampered the restructuring process that was needed to bring True North inside the already unwieldy Interpublic group. In addition, FCB had just lost the DaimlerChrysler account, worth US $116 million. And to pile on the agony, flagship McCann client Coca-Cola (for whom the agency had penned ‘I’d like to teach the world to sing’ in the 1970s) was beginning to pull out of the agency, placing work with smaller operations. It would be years before Interpublic was back on a fully even keel, especially as it was soon buffeted by claims of accounting imbalances. While ‘neither admitting nor denying’ the allegations, the group agreed to pay a civil penalty of US $12 million to the Securities and Exchange Commission (‘Interpublic, SEC reach $12 mil settlement’, Adweek, 1 May 2008). The following year, just as its recovery seemed imminent, IPG fell into another global economic trough.

  In 2011 it was forced to concede its third place in the list of the world’s largest advertising holding groups to Publicis. Yet it is and will remain an entity to be reckoned with: 42,000 employees in more than 130 countries and net income of over US $551 million.

  Publicis: readjusting the compass

  One of Marcel Bleustein-Blanchet’s challenges to Maurice Lévy had been to take the agency global. This proved an even more fraught expedition than he might have imagined. In 1988, Lévy discovered that Foote, Cone & Belding was looking for international partners in order to grow in Europe and Asia. Having been named Agency of the Year in 1986 by Advertising Age, largely on the strength of its Levi’s and California Raisins campaigns, FCB looked like an attractive proposition to Lévy. But he recalls, ‘The initial approach came from FCB. They said, “We’re interested in buying you.” I replied, “That’s not a bad idea – but I’d prefer it if we bought you.” So rather than trying to buy one another, we sat down and worked out an alliance.’

  With complex cross-shareholding arrangements and a coordinating body, the partnership was far more than a gentlemen’s agreement. And for a while it worked for both parties, with the combined agencies netting billings of US $6 billion at the height of the union. ‘We spent several excellent and profitable years together,’ says Lévy. ‘And Publicis learned a lot during that period.’

  But however formal the partnership might have been, it was still dependent on the will of those concerned. This became clear when the FCB CEO with whom Lévy had negotiated the deal, Norman Brown, retired and was replaced by Bruce Mason. It transpired that Mason was not favourable to the alliance, and the relationship between the two agencies grew strained. When Publicis acquired a small advertising agency in the United States, FCB charged that the French agency was competing on its turf and claimed a breach of the original agreement. After
a painful legal wrangle, the partnership was dissolved in 1996. FCB was free to continue along its path as part of the holding company True North, with the results described above.

  Publicis had grown in 1993 with the acquisition of the French network FCA-BMZ, which gave it offices in Germany, the UK, the Netherlands, Belgium and Italy, as well as additional strength in France. But the end of its agreement with True North meant that it had lost its American presence, and could make no claims to being global. ‘Like a woman can’t be half pregnant, you’re either global or you’re not,’ observes Lévy. ‘If you want to work for clients that are present everywhere, you have to be present everywhere too.’

  To make up for lost time, Lévy set off on what he admits was ‘a crazy acquisitions trail’. ‘At one point we were moving into a new country every week,’ he says. One valuable prize was the San Francisco creative agency Hal Riney & Partners, which had already repelled advances from Omnicom, WPP and Interpublic. But Lévy won over founder Hal P Riney by showing his appreciation for the creative work and taking a personal, rather than a corporate, approach to the deal. ‘From a more cynical point of view, I think it helped that we were a long way from San Francisco and less likely to interfere,’ says Lévy. ‘The deal earned us a great deal of respect within the creative community – and also from advertisers – because they saw that we were committed to creativity.’