This was the reaction of James Hewes, President and CEO of FIPP in reaction to Sorrell’s resignation as CEO of WPP, the world’s largest advertising holding company.
The founder and chief executive officer of WPP had been under investigation into financial misconduct, a claim which he has strongly denied. However, mounting attention around the investigation appears to have forced the 73-years old’s hand, who told staff that “the current disruption we are experiencing is simply putting too much unnecessary pressure on the business” and that it was in the best interest of the business “if I step down now”.
Guardian journalist, Mark Sweney, characterised the move as ‘falling on his sword’, publishing Sorrell’s statement to staff in full here.
While the industry had been braced for change at WPP since news of a financial misconduct investigation into the CEO’s dealings first hit the headlines at the beginning of the month, the abruptness of his departure over the weekend has still come as a shock to many.
It is emblematic of the high level of change currently taking place within the traditional media and advertising industries. and FIPP CEO James Hewes highlights the role that the former head of WPP has himself played in this transition:
“Sorrell’s tenure at WPP has spanned the transformation of our industry,” said Hewes. “Initially a huge supporter of the print industry, WPP led the ‘dash for digital’ that saw the rebalancing of the industry away from magazines and newspapers.
In recent years, Sir Martin has suggested that the power of print had been underestimated, although we’ll never know the extent to which he was prepared to translate this into a change in spending priorities.”
WPP chairman Roberto Quarta will take on the role of executive chairman until a direct replacement can be found, while longstanding Wunderman executives Mark Read and Andrew Scott will act as joint chief operating officers to run day-to-day operations. The BBC reports that Sorrell will be treated as having retired, therefore receiving any payments, bonuses and shares in line with his contract.
As the business looks towards succession, WPP faces wider issues. The company has seen its share price slump almost 40% in the last year to its lowest point since 2013, amidst a new mood of austerity amongst some of its leading advertiser brands. This trend has been reflective of the wider agency sector and Sorrell himself has been prophetic on the issue of change in recent months, telling CNBC that consolidation in the wider media sector is ‘inevitable;’ amid pressure from the likes of Amazon and Netflix.
Whatever the wider macro-economic factors now facing WPP, it is clear that the company’s former CEO has acted as a figurehead for the traditional advertising side of the industry for many years. The Times recently dubbed Sorrell the ‘undisputed ringmaster’ over the traditional advertising industry, and asked if the 73-year old was ‘the last of the ad-giants?’ Since his departure PR Week has dubbed him ‘an outsider [that] shaped the global ad industry’. The interesting thing for WPP now will be to what extent it seeks to build on this legacy vs. pushing for further change, and if all of the holding company’s assets stay together within this huge entity.