IIBMS MBA CASE STUDY ANSWER SHEETS – Why do large clients like Samsung wish to work with giant holding companies like WPP instead of with smaller agencies
Case IV – Wpp’s Owner-a British Knight with Every (Marketing) Weapon at His Disposal
To the uniformed, nothing about Martin Sorrell or his company, the WPP group, may be quite what it seems. Although he was awarded a knighthood, Sir Martin is anything but a reserved aristocrat. And while WPP is one of the four largest agency holding companies in the world, the initials actually stand for Wire & Plastic products, the British company Sorrell used to gobble up some of the world’s most famous advertising agencies. The roster of agencies now under the WPP’s wing includes industry leaders Ogivly and Mother, Burson-Marsteller, Hill & knowlton, young & Rubicam, and J. Walter Thompson, to name just a few.
Large conglomerates like WPP made frequent headlines in the 1990s, a period of great consolidation in the advertising industry. Faced with harsh economic and business realities, individual advertising agencies chose to give up independent existence in order to become parts of large communication companies that offered clients all the tools for an integrated campaign, including advertising, direct marketing, public relations, and sales promotion. In the new millennium, dealing with one (or several) of the four large holding companies, WPP Group (England), Interpublic(U.S), Publicis Groups (France), and Omnicom (U.S), is the way the world’s biggest advertisers do business.
While each of the conglomerates is led by a charismatic and dynamic individual, none appears to have an edge on Sorrell, who was described in a recent Fortune article as “…confident, witty, and a tod arrogant, talking rapidly about the future of advertising and the challenges of keeping fractious clients and ad agencies happy.” Fortune also noted that “In an industry populated by shameless schmoozers, the 59-year-old Sorrell is in a league of his own.”
These characteristics have served Sorrell well, In 2004 he squared off against rival Publicis Groups and its CEO, Maurice Levy, in pursuit of one of the last great independent agencies, Grey Advertising, New York. During the battle Advertising Age opined that Publicis had a big advantage because Levy and Grey chair Edward Meyer were friends and had spoken about merging in the past. In addition, both Grey and Publicis created ads for consumer giant procter & Gamble, while WPP agency Ogilvy & Mather counted P&G’s competitor Unilever among its most important clients. (It is customary for agencies not to work for competing accounts.) A Unilever spokesperson, asked for his thoughts about the possibility of working with an agency that created ads for his most important rival, suggested that “In the past, we’ve not seen it to be such a good idea. “But nobody familiar with Martin Sorrell was surprised when at the end of the day he convinced Grey to sign with WPP and persuaded Procter & Gamble to stay as well.
Unlike many of his peers, Sorrell has never written a word of copy, nor has he ever penciled a print design or directed a broadcast commercial. Sorrell’s talents are organizational and strategic; although he is an expert in the world of finance, Sir Martin cautions, “I may be a bean counter, but I’m not an accountant.” To drive home the point he posed for WPP’s annual report surrounded by lima and pinto beans.
So how does Martin Sorrell continue to win in the high-stakes agency world? His vision, developed years before most of his rivals caught on, that twenty-first-century clients would want a complete menu of marketing communication services, all of which work synergistically, is one important reason for his success. Tenacity, energy, focus, and a willingness to do whatever is needed to win are also traits that come to mind. All these are illustrated in the story of Sorrell’s drive to land Korean giant Samsung when the company put its advertising up for review in the spring of 2004. Samsung spends almost $400 million each year supporting its brands, which is reason enough for agencies to salivate for the account. Sorrell believes that the company holds even greater appeal because of his forecast that advertising growth in the twenty-first century will come disproportionately from Asia.
So Sorrell did whatever he could to attract Samsung’s attention. Like any savvy agency head, he assigned his best people to generate creative ideas to pitch to Samsung executives. But unlike most agency heads, he didn’t stop there. After discovering that a Samsung-financed museum was having a grand opening in Seoul, Sorrell jumped on a plane and ended up being the only agency person there. Samsung executives found themselves receiving emails from Sorrell at all time of the day and night. Peter Stringham, marketing director of HSBC, a company that Sorrell landed after several years of trying, commented, “Martin can be quite persistent. He was there from the first meeting to the last. He’d pitched to us a couple of times before and not gotten the account, but he’d had his eye on it for years.”
Needless to say, in the fall of 2004, Samsung announced it was awarding its account to WPP. In the new millennium, British knights may not wear armor, carry a crest, or rescue damsels in distress. But Sir Martin Sorrell knows how to triumph in the competitive world of advertising agencies.
- Why do large clients like Samsung wish to work with giant holding companies like WPP instead of with smaller agencies?
- What qualities help Sorrell to be successful? Why are these qualities so important for his company’s success?
- Explain how Martin Sorrell wins clients and builds positive agency-client relationships. How does he see the agency’s role in marketing?
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