Advertising in the digital age bears little resemblance to the Mad Men depiction—the Don Drapers of advertising have been replaced by big data and the people who work with it. Professor John Deighton, the author of the case "WPP: From Mad Men to Math Men (and Women)," and Sir Martin Sorrell, founder and group chief executive of WPP and the protagonist in the case, discuss how WPP has been successful in the new advertising world order, where algorithms and robots rule.
TRANSCRIPT: Edited for length and clarity. Conversation recorded in March 2017
Brian Kenny: He's a handsome, hard drinking, chain smoking ad man with a shadowy past, that charms his clients and cheats on his wife. If this is your image of advertising executives then you must be a fan of the show Mad Men, whose lead character, Don Draper, leads an ad firm on Madison Avenue during what some would claim was the Golden Age of advertising.
Advertising in the digital age bears little resemblance to the Mad Men depiction, but those who are in the business today might argue that we are in the midst of the next Golden Age, one marked by the delicate balance of art and science, creativity, and analytics. Today we will hear from Professor John Deighton, the author, and Sir Martin Sorrell, the protagonist, in the case study, entitled, "WPP: From 'Mad Men' to Math Men (and Women)." I'm your host, Brian Kenny, and you're listening to Cold Call.
Sir Martin Sorrell is the founder and group chief executive of WPP, the world's largest communication services group. Professor John Deighton is an authority on consumer behavior and marketing, with a focus on digital and direct marketing and big data in marketing. Thank you both for joining me today. This is a new thing for Cold Call. We typically only interview the author of the case, but we were very happy today to have the protagonist join us as well.
Sir Martin Sorrell: You'll get the other side of the story.
Kenny: We’ll get the truth today. John, can you begin just by setting up the case for us?
Deighton: I think the title does the best job of setting up the case. I had been working for several years on the topic of big data in marketing. Marketing is changing fundamentally from the era of broadcast to the era of one-to-one. I was reading the WPP year-end report and saw the phrase, "From Mad Men to Math Men." This is the revolution that is taking place. It is a revolution from the Don Drapers of the world to people who work with data. I said, "I just have to have a case with that title." It tells the whole story.
Of course, Sir Martin is the embodiment of the last 30 years. The transformation from the celebrity, star, creative agency--the Ogilvy or the Leo Burnett--into the agency holding company. It's truly astonishing how well it's been performed. Now comes another radical transformation. So we'll see how that one goes.
Kenny: Sir Martin, can you give us the back story to WPP, starting with the origins of the name?
Sorrell: Wire and Plastic Products. A wire basket manufacturer. Some people said we made supermarket trolleys, we couldn't figure out how to get one basket on top of the other. It was actually shopping baskets. I wanted to start my own business so I bought with a stockbroker 29.9 percent -- which means we didn't have to make a takeover offer -- of a small shell company worth 1 million pounds. Today we're worth 23 billion, 24 billion pounds. But we've had our ups and our downs. There have been some faults along the way. It's been cyclical, everything is cyclical. In fact, one of the problems is when you believe your business is not cyclical.
We've gone through two revolutions, evolutions. The first was at Saatchi, the second was at WPP. The strategy was very much built around four pillars, or four principles. The first is horizontality, which is a terrible word, but really is about trying to create one firm. That's one of the big differences because we are multi-branded, largely to deal with conflicts between clients, whether they're in package goods, autos, pharmaceuticals or wherever it happens to be. So, horizontality is the first. Creating one firm rather than 12, 13, 14 verticals.
Second is fast-growth markets, which is a third of our business. Asia, Latin America, Africa, Middle East, Central and Eastern Europe because that's where the next billion consumers are going to come.
Third is digital, which is almost 40 percent of our business. You go back four years or so ago, fast-growth markets were 10 percent. They're now a third. Digital was virtually zero and is now, I would say, approaching 40 percent of our business.
Last but not least, akin to digital, is data. Which is 25 percent of our business. Five billion out of $20 billion of our revenues come from first-party data. This is not stuff we buy from other people. This is stuff that we work on with our clients. It could be panel data, it could be custom data, semi-syndicated data, syndicated data that we develop with our clients.
Those four principle pillars are the strategy that we're operating currently.
Kenny: I want to read a quote from the case, from you: "Average people are cooperative. The better the people the harder it is to get them to work together." I would imagine it's a huge challenge given all the firms that are now under the brand, the umbrella. How do you get them all to work together? How much do you want them to work together?
Sorrell: With difficulty, is the answer to that. What clients want are the best people working on their business. We have 200,000 people in one way or another in 113 markets.
Let me give you a good example, because it happened about 24, 48 hours ago. We signed an agreement with Walgreen Boots Alliance, which is a large health and wellness...chain of retail and wholesale [stores] throughout the United States. With Walgreens, Duane Reade, Boots in the UK…And Stefano Pessina and Ornella Barra are the two principles at the company who are driving the growth of that retail and wholesale operation around the world. They'll expand in other parts of the world.
What we did there was an agreement between WPP and WBA, which stands for Walgreens Boots Alliance, to consolidate all of their marketing activities. That's media, creative, digital, everything, into our organization. The basic premise is we would provide them with the best access not just to one vertical--to J. Walter Thompson, Ogilvy and Mather, Young and Rubicam--but to the organization as a whole.
That is happening more and more. Whether it's Ford Motor Company, which is our largest client, or Colgate, which is in our top ten, where they have consolidated similarly like WBA. I would say 85, 90 percent of their marketing activity is with us. We can do two things better. One is we can ensure that we have the best people working on the business... We can provide more effective, better work, at a lower cost....MUCH MORE