What is it that sets Sir Martin Sorrell apart? Generally viewed as a money man rather than an ad man, the former finance director of Saatchi & Saatchi leads the second-biggest marketing services business on the planet. He scored only a 2:2 for his Economics degree (at Cambridge) and punctuates conversations with self-deprecatory references to his intelligence.
For example, on the problems facing traditional media brands like The Economist, he says: "'Cos I'm thick, I want somebody to give me indications or ideas or analysis on key events instantly." He can't mean it. As the architect of global ad network WPP, he is the most influential man in advertising. At the last count, in February, WPP made annual sales of £5.4 billion and boasted 84,000 employees in 106 countries.
But if it's not off-the-scale intelligence nor a brilliant approach to advertising - he doesn't pretend to be from the 'creative' end of the industry - what has made Sir Martin and the company he built so powerful?
One clue might lie in our meeting to discuss the rise of digital. We wait for an hour while he hosts a WPP board meeting, presumably to discuss the group's annual results announcement, due two days later. Mobile calls interrupt at regular intervals and there may be other things on his mind, including a law suit from his former country manager in Italy.
But, when conversation finally turns to digital media and its obvious potential impact on the ad industry, he becomes the very model of concentration. He clearly has the ability to be focused on the matter in hand. He is also a renowned trend-spotter. Compared with Omnicom and Interpublic, Sir Martin's WPP was the first of the ad networks to realise that clients might want combined propositions from its agencies.
He is now demonstrating the same prescience in digital and, along with China, he picks the growth of internet consumption as the major challenge facing businesses.
Perfect market
Sir Martin believes the web has changed the rules for everybody: "I always remember when I struggled through economics that, in supply and demand models, there were always these assumptions and one of these was no barriers to free trade and no barriers to information; this is the closest we've got to perfect information."
He tells a story of how a 200-year argument about the author of six lines of poetry was resolved in just a few seconds when a student finally thought to conduct a Google search. "We've broken what I call the tyranny of geography," he adds. "In the old days, when you wanted to book a hotel in New York you needed to know the names of the hotels in New York and ring them up. Now you just press a button and it's free."
Free competition means a more level playing field. But, the problem for agencies, advertisers and media owners, is working out how, in a perfect market, they can tip the balance in their favour. It's a problem to which Sir Martin says there is no real answer, except to try to get to grips with the new world order as best they can.
He explains: "I think, for all three communities, it's very difficult to find the balance. The reason it's difficult is that, if you have a traditional media owner, if you have a traditional client approach, if you have a traditional agency approach, because there are new structures out there, what do you do?"
He points to Craig's List, the online local information service that offers free classified ads, as a key example of the threat to traditional models. "If you own a newspaper that depends on classified advertising, what do you do? If you reproduce your own Craig's List, you completely destroy your revenue source, so you have to find another way of getting revenue back." E
"What the internet has done, in my view, is to permanently reduce the prices consumers are paying, but the squeeze is on the traditional, legacy deliverers of that service," he adds. "That could be a client or media owner, or it could be us. All those three communities are being disintermediated and have to respond with a new model. The painful thing is that the new model may be totally different and may be less profitable."
For these 'legacy' businesses, it is a bleak picture. A recent spate of acquisitions suggests a new attempt by traditional businesses to get to grips with the web. These include ITV's acquisition of Friends Reunited, Aegis' buy of glue London, and News Corp's takeover of Easynet and MySpace.
But Sir Martin is convinced that the old guard is in no position to react properly: "No traditional business in our industry will adapt rapidly enough because the people who run those companies, like me, tend to be at the older end of the age spectrum and they tend not to be 'geeks'.
The way I use media is very different to the way my kids use media or the way my grand-kids will use media."
Nonetheless, blue-chip bosses must try to adapt and WPP has made inroads.
More than 20 of its companies ply their trade specifically in interactive, contributing to the five per cent of sales that came from "narrowly defined, internet-related revenues" last year. On Sir Martin's own broader scale, 'measurable media' produced 15 per cent. This combines the sales of his digital businesses, such as interactive agency Goodtechnology, with market research companies like Millward Brown and direct agencies, including Wunderman and OgilvyOne.
Even so, networks and above-the-line agencies, of which WPP owns many of the biggest, have been attacked for their failure to come to terms with digital. So, even if he may be the wrong man for the job, how does Sir Martin get all the agencies under his rule to respond?
New ventures
"You have to do two things," he says. "You have to encourage the traditional verticals to embrace the new technologies - and that can be mobile, VOIP, the internet, a whole range of things - as rapidly as possible. But, because I fundamentally believe it's very difficult for a company that has grown in a traditional way to react fast enough, I think you have to have a separate vertical within the organisation - let's call it WPP.com - which is the vertical that you encourage experimentation with. You invest in new ventures, you make acquisitions, you attract new people."
The mention of acquisitions sends the antennae racing, chiefly on behalf of independent digital agencies. Many are hoping to cash in, having missed out after the dotcom crash put a gigantic spanner in the works of their original exit plans. For them, Sir Martin has some promising news: WPP.com, the vehicle for its digital investments, is getting a new strategy.
Mark Read, strategy director at WPP, explains: "Our view is that we have to develop digital within our existing businesses and we are doing that.
But digital is too important to just leave up to them, so we think we also need the structures in place to move more quickly."
He says the group is making a new commitment to WPP.com, which will encourage more investment in digital businesses and build its role as a central development arm for 'new media' knowledge-sharing across the group. A name change is also expected within the next couple of months. "The strategy is in place - we're working on the implementation," adds Read.
So, given this new focus, are there any particular digital holes in the WPP line-up that Sir Martin would like to fill? A wry smile appears on his face, accompanied by the tiniest of winks: "Lots of them - it's like a Gruyere cheese." Then, he adds, "we've invested heavily in mobile, we've invested in measurement," but that's as much as he'll say. E
However, for those agencies keen to join the WPP fold, there might be concerns. The jury is still out on how far they can go as network-owned entities since, if a key benefit of selling up is access to the massive client base of networks, then integration with their new sister agencies is key.
But it's clear that achieving this is difficult. As Sir Martin points out, "eighty-five to 90 per cent of WPP is institution-led", highlighting the power and legacy of agency brands like JWT and Young & Rubicam.
Most powerful
Another worry might be Sir Martin's commitment to the web almost exclusively as a medium for 'direct' advertising rather than brand-building. "If you went back and looked at David Ogilvy's (founder of WPP-owned Ogilvy & Mather and 'the father of modern advertising') work 50 years ago, he talked about the importance of direct communication and I see the internet as a subset of direct and one-to-one communication," he says. "So, this is another medium by which you can communicate on an individual basis.
And it's the most powerful. We have never seen a medium like this; that is so socialistic, so 'communistic' in terms of its ability to link people up, and, if not at zero cost, then close to zero cost."
Some might criticise the lack of consideration given to brand building via digital, but Sir Martin counters that the acquisition of Dynamic Logic Europe, which measures the impact of online campaigns on brand perceptions, recognises this aspect.
He adds: "The measurability of (campaigns on the internet) is supposed to be better, but I don't think we've got to the key measuring variables.
I think we have to do more work on that. Millward Brown is doing a lot of work with Dynamic Logic; it's doing a lot of work with Research International.
We're wrestling with this issue."
As we talk, his focus is absolute. He is aware of the potential impact of online, but also aware that its current contribution is small. His advice in this new period of dotcom growth is to expect bumps, though he'll view them as buying opportunities. And he is very conscious that "no-one will get fired at the moment for investing in digital". Then you're reminded that there are other things to be getting on with; after half an hour someone "very important" arrives. Our time is up and his focus - once again absolute - is somewhere else.
WPP - A BRIEF HISTORY 1985: Martin Sorrell takes stake in Wire & Plastic Products, a UK maker of wire baskets, following his search for a public entity to build a worldwide marketing services company 1986: Below-the-line capabilities provided by the acquisition of 10 marketing services firms in the UK and US 1987: $566m bid for JWT Group 1989: Acquires The Ogilvy Group for $864m 1990: WPP named top agency group in the world (Ad Age) 1997: Launches media planning, buying and research firm MindShare in Europe/Asia 1998: WPP joins FTSE 100 1999: Acquires The Brand Union, including corporate identity specialist Lambie-Nairn 2000 Buys Young & Rubicam Group 2001: Acquires Tempus Group, including Outrider 2003: Buys Cordiant Communications Group, including Bates, Fitch, 141 Worldwide and HealthWorld 2005: Acquires Grey Global Group, including MediaCom and Media.com WPP and digital Interactive services
DIGITAL COMMUNICATIONS
WPP firms, from digital@JWT and OgilvyInteractive to Wunderman and Outrider offer digital services; from online ads and branding to digital TV and mobile marketing consultancy
Internet consultancy
It has taken an integrated approach with agencies like Inferentia, Syzygy and VML
MARKET RESEARCH
WPP firms like Lightspeed, Red Sheriff and Market Tools offer online market research
E-business enablement
This includes enterprise collaboration and knowledge management firm Intraspect
INVESTMENTS
WPP.COM
WPP.com co-ordinates new media activities and invests in firms with specialist technology capabilities
ALLEGIS CAPITAL
Via Allegis' MTV, MTV III, MTEP and MTEF II funds, WPP has invested in: Bizrate, EVEO, HotU, IdeaForest, Imagicast, IronPort, LGC Wireless, Live-World, Market Axess, mPower, rent.com, TrueSpectra, Zowi, Venier, Visto and Z-force Soundview Ventures
Via Soundview, WPP has invested in specialists in systems management software for distributed computing (ProactiveNet, InterSAN, Covigna, Active Buddy's, Moreover, Xora), supply-chain improvers (Tilion, MaterialNet, Eventra) and others (Mortgage IT, Blaze, Metapa, Tutor.com, HNW, ITF Optical Technology and Netforensics).
ELWIN CAPITAL PARTNERS
Via Elwin, WPP has invested in early-stage European technology firms Celltick, Congruency and Office Tiger.
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