WPP insiders question former boss Sorrell's 'listening mode' with S4 Capital

WPP insiders question former boss Sorrell's 'listening mode' with S4 Capital

Sir Martin Sorrell's new venture represents a change in approach, which has come as a surprise to many of his former WPP staff.

Sir Martin Sorrell says he is in listening mode with his start-up, S4 Capital, and he has certainly taken a new approach when it comes to structuring his first deal with MediaMonks.

There’s no earn-out, the group is agile and flexible and run on a single P&L basis and the Dutch content production company already "co-locates resource" at both agency and client.

"This is a structure that listens or attempts to listen to what clients are saying – whether you listen to a Keith Weed [at Unilever] or a Marc Pritchard [at Procter & Gamble] or an Andrew Clarke [at Mars]," Sorrell says.

"Clearly clients are questioning how things are delivered and how work is delivered. They’re not questioning the creative product or the quality of work – they’re questioning the way that quality creative product is delivered."

Some of Sorrell’s old WPP colleagues and allies aren’t so impressed by his new pitch.

They urged him to take a more flexible, agile approach and move to a one-P&L model for clients in his final years at WPP but they say he would not listen.

The problem with 'horizontality'

His policy of horizontality – getting agencies to work together while still operating separately – proved too rigid (even if Sorrell has said it is "a bit unfair" to suggest WPP was "a monolith" under his leadership).

The facts are that WPP’s revenue growth went into reverse and the share price fell by a third in his last year in charge.

Johnny Hornby, founder of The & Partnership, a joint venture with WPP, says many WPP staff will find it "at best ironic" that their former chief executive has suddenly changed his tone.

Hornby, an old ally, says: "At his global management get-togethers for the last two or three years, that I have attended, there were growing, very strong levels of frustration at the horizontality agenda and the idea that [WPP’s] companies needed to be kept separate with competing bottom lines.

"They [WPP staff] would also observe him saying ‘I’ve had a chat with Marc Pritchard and Keith Weed and they say they want a different way of doing things’ – well, he could have had that conversation with them any time in the last four or five years."

The proof, Hornby adds, is that some other agencies listened to marketers’ needs and started mixing creative, media and data talent and putting them "on-site" in clients’ offices some time ago – from 2014 in the case of The & Partnership.

"You’d have had to have cloth in your ears" not to have realised that’s what clients wanted and that "media and creative and data people have been asking to be aligned and unshackled from competing
bottom lines for three or four years", he says.

Anger and disappointment

Hornby is freer to talk because he controls a majority stake in The & Partnership but plenty of previously loyal WPP staff feel aggrieved. It is hard to overstate the scale of the anger and disappointment that some senior executives feel privately towards their old boss, particularly as he keeps causing trouble by sniping from the sidelines.

Sorrell’s lack of a non-compete clause continues to rankle because it has allowed him to set up what looks like a rival, despite his claim that S4 Capital is only "a peanut".

WPP’s lawyers have warned Sorrell that he has put at risk up to £20m in share awards by allegedly using information from his time at WPP to inform his plans for S4 Capital, including the MediaMonks deal.

He has denied wrongdoing and dismissed the threat to his share awards as "a weak and feeble attempt to destabilise the bid" for MediaMonks. Yet Sorrell seems to relish the confrontation and the legal letters. The impression is that he wants to needle the WPP board and his nemesis, chairman Roberto Quarta.

Sorrell suggested at Cannes Lions that WPP should hire co-chief executives, rather than appoint frontrunner Mark Read on his own. Then, when Hugo Shong stepped down as a WPP non-executive director to focus on other interests, Sorrell said he was "saddened and disturbed" and claimed that "it is not good news" for the group’s prospects in China.

The Sorrell camp insists he is right to speak out. "He is the largest private shareholder in WPP so I guess he is just reflecting the concerns of a number of shareholders," a source close to Sorrell says.

A WPP spokesman responds: "All shareholders are entitled to their views. Meanwhile, the board is focused on ensuring WPP provides clients with the services they need in the most effective way, which will in turn help to rebuild shareholder value."

That is a pointed reminder about WPP’s share price slump during Sorrell’s last year.

At least one old friend has told the former WPP chief that he would be wiser to keep quiet about his old company and focus on the future. However, Sorrell, who is now called "Senior Monk", has not been willing to take a vow of silence so far.

WPP insiders admit the soap opera has been a distraction, even if they are getting on with business.

A distracting soap opera

The company needs to find a successor who can restructure the empire that Sorrell built and it has moved back its second quarter results until 4 September.

Quarta, who knows little about advertising, has been canvassing the views of clients and invited Paul Polman, the chief executive of Unilever, to talk to the board.

Sorrell may be obsessed about what happens at WPP without him and yet, in some respects, he must be relieved to have left the holding company sector.

WPP's biggest rivals, Publicis Groupe and Omnicom, have posted lacklustre financial results in recent weeks.

The need for restructuring, if not industry consolidation, is more pressing than when Publicis and Omnicom announced their ill-fated plan to merge exactly five years ago this week.

The appointment of a new WPP chief executive will mark the start of a new era. It may be too much to hope it will be the end of Sorrell’s grudge match.

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