Sir Martin Sorrell downplays P&G agency shakedown headlines but says model must change

Sorrell said Pritchard had clarified his point to him personally

WPP chief exec Sir Martin Sorrell has reiterated his view that agencies must adapt their business models to function in a digital landscape, but played down the weight of headlines citing that longtime client Procter and Gamble (P&G) intended to claw back power from its ad agencies.

Referencing comments made by P&G’s top marketer Marc Pritchard earlier this week in which the chief marketing officer declared “2018 as the year we take back control and transform the industry through mass disruption,” Sorrell claimed that the story had been taken out of context by some outlets – including the Financial Times.

Indeed, Pritchard did outline P&G's ambitions to slash the money it spends on "wasted media by 50%" and "re-invent" agency partnerships to work "with agencies, not through them," but Sorrell said Pritchard had clarified his point to him personally.

Speaking specifically on the FT's take on Pritchard's comments*, which ran under the headline "P&G brand chief vows to ‘take back control’ from agencies", Sorrell began by giving some insight into the conversations going on behind closed doors between the holding group and the client. "There are significant corrections that should be made to that article and I have spoken to [Pritchard] about it," he added.

The WPP boss went on to say: “One thing that is quite clear from Pritchard’s statements is that [us agencies] have to change our model." For WPP he added this has so far included "accelerating" the pace at which it has implemented internal changes such as appointing agency leads to work with its biggest clients and naming country managers for each market.

He asserted that building out digital-based systems, like WPP's production tool Hogarth, was also a way in which the holding group was evolving how it worked with brands.

"Yes the model has to change; what Marc Pritchard was actually talking about [earlier this week] is how P&G is changing its own model. The agencies it works with – which are principally ourselves and Publics – are changing our models in the same way but we're doing so at an accelerated pace because the need for us to do so has got stronger, and the pressure and speed of response have really heightened."

Sorrell's comments come as P&G continues to put its agencies on high alert with an ongoing efficiency drive. Earlier this month the brand announced it was to cut its agency roster in half by the close of 2018. The move is just the latest act in a four-year cull witnessing some 4,700 firms axed from its books.

Moving on to discuss ongoing concerns from advertisers around safety, ad fraud and the subsequent value of investing in platforms like Google and Facebook (which WPP invested $5bn and $2bn respectively in 2017 on behalf of clients), the boss said he recognised that agencies have a “responsibility” in the transparency debate and stressed that he advocated a “zero tolerance” approach to the matter.

Talking during a Q&A with the ex-Guardian media editor Jane Martinson, Sorrell went on to say that the extent to which there has been “fraud or viewability issues, as well as poor, inadequate placement or wrong placement or whatever” was not as significant as has been suggested by some outlets.

Last week, Sorrell pledged to accelerate the "simplification" of WPP's structure after the group reported a 0.9% fall in 2017 net sales and a 0.3% drop in annual revenues. He described the past 12 months as "not a pretty year" for the company due to tech disruption and the emergence of zero-based budgeters.

*The Drum contacted the Financial Times for its right to reply, but a spokesperson declined to comment

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