WPP's Martin Sorrell on the Publicom Collapse
The collapse of the planned merger between Publicis Groupe and Omnicom Group, two of adland's biggest players, means rival WPP Group gets to keep its top spot in the industry by revenue, at $17.25 billion. Ad Age talked to WPP CEO Martin Sorrell soon after the collapse of the deal became public. He weighed in on what might have gone wrong and what their breakup means for the industry.
Advertising Age: What were your first thoughts on the breakup?
Martin Sorrell: I don't think it was a surprise. It was probably somewhat surprising that it came so quickly. A lot of people believed that it would crank on for another month or so, but most people thought it was a dead deal.
Ad Age: What are the lessons here?
Mr. Sorrell: Two CEOs sit in a room formidably for six months discussing a deal of this size without talking to anyone else or what they call expensive advisors. Perhaps they should have spent time with expensive advisors. If you do a deal of that nature you should think it through before you announce it.
Ad Age: What really went wrong?
Mr. Sorrell: As I said from day one, this was a clunky structure with reverse strategies and regulatory problems. It caused strains with clients and with people internally. All of that comes to pass.
Ad Age: At this point, why do you think they made the decision in the first place?
Mr. Sorrell: I think it was an emotional decision. Wren and Levy wanted to knock WPP off its perches. Any deal was doomed to fail. Secondly, it was Gallic charm. Wren was charmed by Levy into believing Levy would ride off into the sunset. That clearly was not the case if you look at the structure. The third thing: Their eyes were bigger than their tummy.
On the quarterly earning calls for Q1, both made the case for separate [companies] being as good as they are together, which begs the question, why did they put the deal together in the first place, if they're as well off separately as they were before.
Ad Age: What does this mean for WPP?
Mr. Sorrell: We obviously made hay while the sun was shining. [On new business] we won Marks and Spencer, Vodafone, E-Trade. There will be further opportunities as a result [of the collapse]. I'm sure there will be repercussions.
Ad Age: Do you think we'll see more M&A on either side?
Mr. Sorrell: Ask them. Since the announcement we've done 60 to 80 deals.