Sir Martinâ€™s Odyssey
WE Communications Blog: Alan VanderMolen
In the iconic scene from Stanley Kubrickâ€™sÂ 2001:Â A Space Odyssey, astronautÂ Dr. Dave Bowman faces offÂ against his vesselâ€™s omnipresent and all-controlling operating system, HAL.
Dr. Dave has realised he and crew mate, Dr. Frank Poole, have lost control of the mission and of HAL. So, in a desperate attempt to re-establish order, Dave and Frank attempt to shut down HAL. HAL, however, has other ideas.
On Saturday, Sir Martinâ€™s Dave surrendered to WPPâ€™s HAL asÂ Sorrell resignedÂ after more than 30 years as CEO of WPP. No matter your views of Sir Martin and WPP, there is no denying that the leader and the company set the tone for marketing services for the better part of three decades.
Similar to the on-going debates about the true meaning ofÂ 2001: A Space OdysseyÂ (in particular now, during its 50th Anniversary year), there are already plenty of theories about what went down with Sir Martin and what it means for WPP and, in fact, all of the marketing services holding companies.
Instead of adding to that thread, I would like to suggest four learnings for us all to heed from Sir Martinâ€™s Odyssey:
1. Pay Attention to Disruption
In Sorrellâ€™sÂ goodbye noteÂ to WPP employees, he said: â€śAs I look ahead, I see the current disruption we are experiencing is simply putting too much pressure on the business.â€ť He is, of course, entirely correct. Problem is, he was referring to the investigation into alleged personal misconduct. The disruption he should have been paying attention to is digital disruption and what it has done to WPPâ€™s growth and business models.
When WPP reported full year results from 2017, Sorrell downplayed the impact that digital platforms (namely Google and Facebook) were having on the holding company's business. He cited, according to reporting byÂ The Guardian's Mark Sweney,Â that WPP companies alone put US$6 billion into Google on behalf of clients (a 10-percent increase over 2016) and an additional US$2.1 billion into Facebook (a 30-percent rise over 2016). There are two corollaries here: First, how much money did clients spend directly with those platforms that came out of traditional advertising budgets? Second, how much creative and production money was lost as clients now can do much of that work themselves on today's easier-to-execute digital native platforms? The point for all of us who depend on the modern media ecosystem to support our businesses (be we client or agency), is that media fragmentation is not slowing down anytime soon and we had better understand the commercial and business model implications of that lest we find ourselves riding White Elephants.
2. Donâ€™t Blame Clients
For about the last 24 months, usually through WPP earnings commentary, Sir Martin has bemoaned client-side pressures on his business. He has cited the decline in spend from CPG clients, which admittedly, is factual. He has also, however, focused on two other points. First, the impact that consulting firms are having on the advertising industry (through both performance marketing models that measure advertising efficacy and by acquiring downstream marketing agencies to support their clients). Second, the shift that many marketers are making to zero-based budgeting, a practice where the 'customary' 5-8 percent increase per year in marketing spend that went to agencies each year is wiped out in favour of clients starting with 'zero budget' and defending the efficacy of every dollar being spent every year.
Both complaints equate with a sense of entitlement. A feeling that budgets are given, not earned...and, certainly not required to be vigorously defended. Sir Martin started veering in a direction that could be interpreted as blaming clients for asking questions (be they from their consultants or from their own teams) about spend and how to allocate budgets in a market where mainstream media and 30-second spots are no longer the currency that move consumers.
3. Consolidation is Not Innovation
Financial markets want bothÂ growth and marginÂ â€“ consistently. This is something Sir Martin knows and has driven for three decades. In the markets, however, when growth slows (or reverses) there is immediate call for cost cutting. We saw the textbook example of this earlier in the year with the consolidation of Burson-Marsteller with Cohn & Wolfe intoÂ FrankenAgency, BCW. There have also been rampant rumours of further WPP agency consolidation with Y&R and Grey coming together in a similar mash up.
Consolidation does not bring innovation. It brings cost savings. Will the smaller C&W be able to revive growth in Burson through consolidation? Doubtful. Consolidation is a desperate tactic and is, in fact, anti-innovation. Marketing services broadly, and PR specifically, need to invest in modernisation to reflect what is happening in the media ecosystem and decrease reliance on earned media...not throw a collection of earned media shops together and hope for a different result.
4. You Cannot Go Back to the Future
Sorrell signed off his goodbye note to colleagues on Saturday with the line, "now, back to the future."Â One of my friendsÂ and a keen industry observer called that out to me with a comment, "we have not seen the end of him." A report in today's FT detailing the lack of a non-compete in Sorrell's contract would seem to validate that POV.
That said, no one can go back to the future. I would suggest that part of WPP's woes were a sense of invincibility related to its 'world-domination-through-acquisition model'. With a name like "Wire and Plastic Products" (truly, that is what the initials in WPP stand for), one would think that Sorrell would have had a constant reminder that one needs to manage and lead in the present and to have a keen understanding of how to move forward in an ever-changing marketplace.
It is not lost on many that the interim leadership of WPP comes in the form of co-COOs, Mark Read and Andrew Scott...both of whom hail from perhaps WPP's most modern agency, Wunderman. Wunderman was started as a direct mail agency and was one of the first agencies to effectively evolve to a digital-platform driven shopâ€¦surely moving forward.
As we close the Sorrell chapter at the monolith that is WPP, I suggest we all take some lessons and look outside vs. in. As Spaceman Dave said:Â My God, it's full of stars.