WPP entered uncharted territory on Monday after the exit of founder Martin Sorrell left the earth’s biggest advertising company rudderless at a time of intense industry change.
Shares in WPP fell 6 percent after Sorrell, the driving force behind 33 years of dealmaking as well as relentless expansion, stepped down on Saturday after the board investigated an allegation of misconduct.
David Herro of Harris Associates, WPP’s biggest shareholder according to Thomson Reuters data, said Sorrell would likely be missed.
“Sir Martin is actually a visionary, a legend in advertising as well as a skillful businessman,” he said. “The circumstances surrounding which are regrettable as is actually a leadership transition without Sir Martin’s involvement.
The sudden departure of Sorrell, the face of the company which he founded in 1985, has sparked questions as to whether the holding group can remain in its current form of employing 0,000 people in more than 400 agencies across 112 countries.
which has also prompted fears which without Sorrell’s contacts which could lose clients as well as talent while which seeks a fresh CEO.
“We think the lack of operational direction for the group as well as potential for client losses are clear downside risks over the short to medium term,” Deutsche Bank said.
“The potential for asset sales or even a break-up may provide some support, nevertheless these are highly uncertain as well as unlikely to take place within the near-term.”
WPP said which chairman Roberto Quarta will become executive chairman while its digital boss Mark Read as well as Andrew Scott, the chief operating officer of WPP Europe who oversaw acquisitions, become joint chief operating officers.
They inherit a difficult task, with WPP in March publishing its weakest results since the financial crisis as consumer goods groups such as Unilever as well as P&G cut spending as well as different customers jumped ship.
The industry is actually also battling the might of Google as well as Facebook, which dominate the online advertising market, as well as watching nervously as consultants such as Accenture move more aggressively into the sector.
The changing dynamics have meant the previous idea of building marketing groups up to offer advertising, branding, planning as well as research on a global scale – championed by Sorrell as well as followed by others – is actually right now under threat as clients want more nimble relationships in a digital age.
Many are starting to ask if they can do things differently – creating their own content to place directly on online platforms or working with smaller ad groups.
Analysts are already saying which WPP’s market research arm Kantar could be sold off for around 3.5 billion pounds ($5 billion), compared with the group’s overall market value of 14.5 billion pounds, as well as question whether there are synergies via holding PR assets like Finsbury.
Sorrell had argued which the insight provided via market research had set WPP apart via peers such as Omnicom, Publicis as well as IPG, enabling which to improve its decision doing when planning as well as buying media space for ads.
The group also owns stakes in groups such as Chime Communications, Vice, AppNexus as well as Chime Communications which could be reviewed.
With so much change within the industry, some analysts have questioned whether the group should seek a fresh CEO via outside who could look at which dispassionately.
Names already within the frame include Jerry Buhlmann, who runs the Dentsu Aegis network, as well as Adam Crozier who previously ran broadcaster ITV as well as Royal Mail. Jeremy Darroch, the well regarded CEO of bid target Sky, as well as Andrew Robertson, boss of rival ad agency BBDO, have also been linked with the job.
via inside WPP Read, 51, is actually seen as the lead candidate.
While a common refrain heard about WPP is actually which no one knows the company like Sorrell, Read is actually the one man who comes close after he wrote to the WPP boss asking for a job in 1989.
via the company’s office in Farm Street, Mayfair, he watched as Sorrell pulled off a string of takeovers before building his own profile by growing its digital operations.
He spent nearly 10 years on the WPP board, introducing him to investors, as well as is actually regarded by peers as a strategic thinker who can win corporate pitches to bring in work.
Scott, 49, is actually better known within the corporate world than the advertising community, having worked on the company’s acquisition strategy.
“Mark will be responsible for clients, operating companies as well as people,” a spokesman said. “Andrew will focus on financial as well as operational performance as well as implementing on-going reorganisation of the group’s portfolio.”
They will “report to as well as be supported” by Quarta. Read has already contacted senior executives within WPP to offer to speak to clients as well as reassure them which work will continue as normal.
Whoever replaces Sorrell however will face longer-term questions as to whether a group which was built in his mould should remain intact after his departure. Already executives are predicting which bits will be sold off in a move which could Yet again become a type for the wider industry.
David Jones, the former CEO of WPP peer Havas as well as the founder of tech marketing group You as well as Mr Jones, predicted WPP would likely eventually end up missing Sorrell more than he would likely WPP.
“No one else can keep which company together the way he has been able to because he built which,” he told Reuters.
“which’s the fall of an emperor as well as one which I think will not only take the empire down with him nevertheless will also have massive ramifications for which entire industry.”
Sorrell, 73, did not have a non-compete clause as well as could set up a fresh advertising business. He owns 1.4 percent of WPP, according to Thomson Reuters data.