Global Policy Forum

by Sharon Beder and Richard Gosden

For the past 15 years, the disparate international tribes of ad men and PR consultants have been quietly consolidating their power by forging giant conglomerates. The two biggest, WPP and Omnicom, were founded within a year of each other in the mid-1980s. Together they now manage the hearts and minds of global populations for their transnational corporate clients.

The rationale behind the amalgamation of advertising and PR companies is simple. The merging spree of transnational corporations in the 1980s and 1990s produced giant companies with far-flung assets and interests. These vastly enlarged corporate entities demanded one-stop advertising and PR services. To provide this service, financial whiz kids moved into the communications business and began the amalgamation process.

Readers of PR Watch are well aware of the dubious achievements of long-standing PR firms such as Hill & Knowlton or Burson-Marsteller, but some might be startled to learn that the manipulative skills of these two companies have recently been combined under one roof. Hill & Knowlton has been owned by WPP since 1987. In October 2000 WPP also acquired Burson-Marsteller when it bought Young & Rubicam for $4.7 billion. With the Young & Rubicam purchase, WPP overtook Omnicom and lunged into forward position as "the world's leading communications services group".

Clients of the WPP Group include the majority of companies in the Fortune Global 500 and the NASDAQ 100, including Ford, IBM, Kellogg, Eastman Kodak and American Express. The combined revenues for WPP and Young & Rubicam were $5.2 billion in 1999, and their combined market value was $14.5 billion. The WPP Group is now one of the top three communication service providers in every market of the world.

"We share a common philosophy and culture of providing clients with integrated solutions to their marketing needs," said WPP founder and CEO Martin Sorrell at the time of the Young & Rubicam acquisition. Indeed, WPP is able to offer clients every conceivable service associated with marketing their products and promoting their corporate goals. It employs 55,000 people in 92 countries and has 1,300 offices. It consists of more than 80 companies including some of the world's largest firms in the areas of advertising: J. Walter Thompson, Ogilvy and Mather, Young & Rubicam. Their services include branding and identity; demographic marketing; direction, promotion and relationship marketing; investor relations; public relations; strategic marketing consulting; and media investment and services. In the field of public relations alone the WPP Group owns 18 companies. In addition to Burson-Marsteller and Hill & Knowlton, it can draw on the skills of Ogilvy Public Relations Worldwide, Cohn & Wolfe and several others.

Sorrell doesn't like to use the word conglomerate to describe his monster. He prefers to call it "a group of tribes. I think the tribes have their value. We would lose a lot of that value if we were only members of the Ogilvy tribe, or the J. Walter Thompson tribe, or the Hill & Knowlton tribe."

WPP began from very humble beginnings in 1985 when Sorrell and a partner paid $676,000 to purchase a controlling stake in a British company called Wire & Plastic Products, which manufactured wire shopping baskets, filing trays and assorted oddments. Previously, Sorrell had been financial director for the Saatchi and Saatchi advertising agency, managing its takeovers of companies in the US and the UK, but he had a vision of far bigger things.

Clearly, Sorrell had no interest in making wire baskets when he bought Wire & Plastic Products. What he wanted was a shell company, a vehicle for buying up other companies. In 1986 Wire & Plastic Products became the innocuous-sounding WPP Group, with Sorrell as its CEO. That same year, the company acquired 10 marketing companies in the US and the UK.

Other acquisitions, financed with borrowed money, followed in quick succession. In a 1987 hostile takeover, WPP acquired the much larger US-based J. Walter Thompson Group, which included Hill and Knowlton, for $566 million. This was only one of nine major acquisitions WPP made that year. Two years later it acquired the Ogilvy Group for $864 million, prompting Time Magazine to describe Sorrell as the "Machiavelli on Madison Avenue" and "the most feared raider to set foot on Madison Avenue."

In 1990 Advertising Age named WPP the top advertising agency in the world. And while WPP was acquiring companies as fast as the banks would allow, its subsidiary companies were also making their own acquisitions. "We continue to trawl carefully for acquisitions and investment opportunities," noted WPP's 1999 annual report.

This takeover activity is still proceeding at full pace without any limitations in sight. Simultaneously, WPP is also busily expanding the reach of the companies and networks it has already purchased. Its annual report boasted that in 1999 WPP "increased its equity interests in advertising and media investment management agencies in Australia, Austria, Brazil, France, Italy, the Netherlands, Portugal, Spain, Sweden, the UK and the US; in information and consultancy in Argentina, France, Germany, Mexico, Poland, the UK and the US; in public relations and public affairs in Chile, Germany, the UK and the US; and in branding and identity, healthcare and specialist communications in Brazil, the Czech Republic, France, Germany, the UK and the US."

WPP seems to be aiming to become more than just a holding company. Its stated goal is to be "the preferred provider of multinational marketing services," providing clients with a comprehensive and integrated mix of both tactical and strategic services. "It is politically incorrect to say so, but our big clients are becoming more coordinated," Sorrell told Forbes Magazine in 1999. For that reason, he explained, communication services must also be coordinated and centralized.

One of WPP's strategies is to form internal networks of its companies to offer specialist services. For example, CommonHealth combines all the WPP companies with expertise in healthcare communications to make an organisation that WPP claims is "the largest healthcare communications resource in the world." Its services include "advertising, consumer promotion, public relations, medical education, and the latest interactive technologies." Its established clients include Pharmacia & Upjohn, Procter and Gamble and Astra Zeneca.

What is the significance of this concentration of ownership in the communication services industry? Is it, as the Guardian newspaper suggests, simply that the advertising and PR industries are catching up with the consolidation binge of transnational corporations? "Having lagged behind the companies they serve for more than a decade, ad agencies rushed to buy, or be bought, in an often bewilderingly rapid feeding frenzy."

Does it matter that four of the world's largest public relations firms are now owned by the same corporation? WPP is a potential powerhouse, a huge propaganda machine, with the reach and coordinated skills in people manipulation that might allow it to rule the hearts and minds of the entire global population.

Some ad men and PR flacks have long dreamed of such a tool. Even back in the early 1980's, when J. Walter Thomson was small fry compared to its WPP parent today, one of its executives went on record musing, "We have within our hands the greatest aggregate means of mass education and persuasion the world has ever seen--namely, the channels of advertising communication. We have power. Why do we not use it?" WPP is a UK-based company. This means that when Hill & Knowlton masterminded the Kuwaiti campaign to sell the Gulf War to the American public, the owners of this highly effective propaganda machine were residing in another country. Should this give pause for thought? Does it demonstrate a certain potential for the future exercise of global political power? The power to manipulate democratic political processes through managing public opinion, which Hill and Knowlton demonstrated 10 years ago, is trifling compared to the potential power now residing in integrated conglomerates like WPP and Omnicom.

Sorrell himself is a somewhat enigmatic figure. He is reported to have a grandness of vision that isn't reflected in either his diminutive stature or his modest self-appraisal. He once famously described himself as "a dull, boring little clerk," but this was before he received a knighthood last year and became Sir Martin.

The chairman of the WPP Board is Hamish Maxwell, who was chairman and CEO of Philip Morris from 1978 to 1991. During the 1980s, when tobacco money was busy with corporate takeovers, Maxwell played a leading role, overseeing Philip Morris's acquisitions of General Foods, Kraft and several other major consumer goods firms. Maxwell has been chairman of WPP since 1996.

Both Sorrell and Maxwell have backgrounds as financial wheelers and dealers, and there is very little on the record which suggests that either one has any kind of political or social vision beyond business. But of course, politics and social engineering is the business of business, isn't it? Sorrell even admits that he has never designed an ad in his life and is happy to call himself a money man. "I like counting beans very much indeed," he says. But he is a money man with a fascination for marketing and public relations. He is said to have a vision of a central role for what he calls "creative" communications in a coming Creative Age when conglomerates such as his will occupy the pivotal position as "creative business consultants" and much more.

But how much more? Sorrell apparently mourns a past when companies would "welcome an agency's thoughts on just about all aspects of their business" and envisions the coming Creative Age as a time when companies like WPP will advise powerful corporations on "all aspects of their business."

Is this a man prepared to tell the world that "toxic sludge is good for you"? Perhaps. But Sorrell's ambition appears to be matched by that of his rival John Wren, the president and CEO of Omnicom. "We're the people who can take cosmic dust and turn it into a brand," Wren boasted in an interview with Business Week.

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