Piyush is not a grumpy old man. Neither am I. WPP chief Martin Sorrell on retirement plans for the Ogilvy India boss and himself

30 Jun,2015

By Shephali Bhatt

 

Piyush Pandey

We caught up with WPP’s chief Sir Martin Sorrell on the last day of Cannes Lions 2015, to talk shop and to clear the air on some rumours. The latter first: Piyush Pandey, the executive chairman and creative director of Ogilvy & Mather (O&M) India and South Asia (a WPP company), celebrated his 60th birthday in Goa earlier this year. While David Mackenzie Ogilvy, the founder of O&M, retired at the age of 62; the industry has been abuzz for quite some time about Pandey’s imminent retirement plans.

 

Is he finally retiring, we ask Sorrell. And he says: “I read an article featuring Maurice Saatchi, Jeremy Sinclair (founders of Saatchi & Saatchi and M&C Saatchi) and Bill Muirhead (executive director, M&C Saatchi) highlighting that these men were ruling their organisations at the age of 68-69. They said that the grumpy old men are going to carry on. Piyush is not a grumpy old man. He’s not dead yet. Neither am I.”

 

On being questioned about the succession plan for both Pandey and him (since he’s 70 himself), Sorrell says, “We have succession plans across the top 200 employees, but I’m not going to discuss that with you.”

 

Sorrell’s biggest concern

His biggest concern about this business is that clients are too short-term focused. They think about the bottom line, and not the top line, especially since the Lehman Brothers crash that heralded the financial crisis of 2008. “Clients have been very focused on cost and not on developing brands and top line, for understandable reasons,” he says. The global GDP growth rate has been slow at 5% nominal and 3-3.5% real. There’s very little price inflation. “As a result you see the rise of procurement department on the client’s end. They get to their numbers, they’re focused on cost rather than developing the revenue. Which is why the irony that people are looking for growth from Western Continental Europe when that’s the one part of the world that hasn’t supplied growth for seven years, since Lehman basically,” he explains.

 

Running a business between disruptors and investors

Sorrell talks about running a business where on one end you have disruptors like Uber and Airbnb (in the old days it was Google and Facebook, and still is to an extent), on the other end you have zero-based budgeters like 3G, Valeant and Endo. And in the middle are investors like Bill Ackman and Nelson Peltz running a legacy business. “The businesses that do best are those that get the concentration of ownership,” he notes. “Indian oligarchs control the ability to make decisions which is good,” he adds.

 

Narrowing gap between fast and slow growth markets

 

At the moment, there’s focus on cost because growth is hard to come by. The fast growth markets still give you more growth than the slow ones but it’s getting more difficult, he says. “The gap has narrowed.”

 

Why clients needs to shift focus from cost

If you were a client faced with slower top line growth, no pricing power, the disruptors on one end, zero-based budgeters on the other, and the activist investors in the middle, there’s no running away then, Sorrell points out.

 

“What you can do is map the top brands in every region using valuation techniques and you’ll find out that people who invest in brands grow their top line faster (which is logical, you would expect that). The biggest driver of total shareholder growth is revenue return, organic revenue growth,” he says.

 

Trying to get someone to act on that when it’s for the long term is very difficult when everyone is thinking short term, he rues. “What we have to do effectively, is spend money on an online+offline campaign, which clearly lays out the argument that marketing is an investment not a cost.”

 

Investing in tech, data and content – to differentiate the business meaningfully

WPP has been focusing on bolstering their portfolio across technology – with AdNexus (ad tech for targeted marketing) and Xaxis (programmatics software); data – with Rentrak, Comscore and Kantar; and content — with Media Rights Capital (producer of ‘House of Cards’, ‘Ted’ and ‘Elysium’), refinery29, Snapchat, Truffle and more. “To differentiate the business meaningfully, to win businesses for factors beyond just the talent of the presenter and the price, we have to get the client to focus on these,” he asserts.

 

On tech companies

“Tech companies have gotten very active. Google may have got softer because of some regulatory issues but Facebook is more aggressive than ever. In a non-constructive way I’d think because they feel more ballsy about catching up to Google on Mobile. Yahoo is very hungry, constructively so. Apple is much more open now. Microsoft is much more coordinated. Twitter, LinkedIn and BuzzFeed have interesting opportunities as well.”

 

Source:The Economic Times

Copyright © 2015, Bennett, Coleman & Co. Ltd. All Rights Reserved

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