WPP: World Propaganda PowerRichard Gosden and
Citation: Sharon Beder and Richard Gosden, 'WPP: World Propaganda Power', PR Watch, 8(2), 2001, pp. 9-10.
This is a final version submitted for publication.
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 one-stop service financial whiz kids moved into the communications business and began the amalgamation process.
Readers of PR Watch are well aware of Hill and Knowltons and Burson Marstellers dubious achievements. But some might be startled to learn that the manipulative skills of these two have recently been combined under one roof. Hill and 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 worlds 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 its new acquisition, 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.
At the time of the acquisition WPP founder and CEO, Martin Sorrell, said of his vast empire, "We share a common philosophy and culture of providing clients with integrated solutions to their marketing needs". Indeed, the diverse group is able to offer clients every conceivable service associated with marketing their products and promoting their corporate goals.
The WPP Group consists of over 80 companies including some of the worlds largest firms in the areas of advertising J. Walter Thompson, Ogilvy and Mather, Young & Rubicam branding and identity; demographic marketing; direction, promotion and relationship marketing; investor relations; pubic relations; strategic marketing consulting; and media investment and services. WPP employs 55,000 people in 92 countries and has 1,300 offices.
In the field of pubic relations the WPP Group not only owns the two largest PR firms worldwide Burson Marsteller and Hill and Knowlton but they can also draw on the skills of Ogilvy Pubic Relations Worldwide, Cohn & Wolfe and several others 18 companies in all.
Sorrell doesnt 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."
The WPP tribal conglomerate began from very humble beginnings in 1985 when Sorrell and a partner bought a controlling stake in a UK public company called Wire & Plastic Products manufacturing wire shopping baskets, filing trays and assorted oddments. It cost them $676,000. Sorrell had been the financial director for advertising agency Saatchi and Saatchi from 1977 to 1985, 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 manufacturing wire baskets when he bought up 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 plc and Sorrell became chief executive. In that same year the company acquired ten marketing companies in the US and the UK.
Using borrowed money the acquisitions came quickly after that. In a hostile takeover in 1987, 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. A couple of 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 whilst WPP was acquiring companies as fast as the banks would allow, its subsidiary companies were also making their own acquisitions. WPPs 1999 annual report notes "We continue to trawl carefully for acquisitions and investment opportunities "
This takeover activity is still proceeding at full pace without any limitations in sight. At the same time WPP is also busily expanding the reach of the companies and networks it has already purchased. According to its annual report: "In 1999 the Group 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."
Despite initial appearances 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", able to provide clients with a comprehensive and integrated range of services that are both tactical and strategic. Sorrell told Forbes Magazine in 1999: "It is politically incorrect to say so, but our big clients are becoming more coordinated". That is the reason, he claimed, that providers of communication services must also be coordinated and centralised.
One of WPPs 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 range through "advertising, consumer promotion, public relations, medical education, and the latest interactive technologies". Its established clients include Pharmacia & Upjohn, Procter and Gamble and Astra Zeneca.
So 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 worlds largest public relations firms are now owned by the same corporation? Is WPP just a holding company formed to make money? Or does it have more colourful possibilities? Could it be a potential power house, 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 1980s, 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 and 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 some pause for thought? Does it demonstrate a certain potential for the future exercise of global political power. It goes without saying that 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 isnt 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 perhaps more familiar. Remember Hamish Maxwell? He was the chairman and CEO of Philip Morris from 1978 to 1991. During the heady 1980s, when tobacco money was busy with corporate takeovers, Maxwell played a leading role. He oversaw Philip Morriss acquisitions of General Foods, Kraft and several other major consumer goods firms. Maxwell has been chairman of WPP since 1996.
Both of these men have backgrounds as financial wheelers and dealers and there is very little on the record which suggests either one has any kind of political or social vision beyond business. But of course, politics and social engineering is the business of business, isnt 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". But, even so, Sorrell 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 agencys thoughts on just about all aspects of their business" and hopes to return to that situation through offering integrated communication services, thereby ensuring that companies such as his own are central to this coming Creative Age, advising powerful corporations on "all aspects of their business". He sees management consultancies as "potential competitors" in this. "In a business world that is going to put a higher and higher value on integrated creativity, we are in danger of losing what should be our overwhelming advantage by allowing something called creativity to be confined to the creative compound."
In a lecture to the Design and Art Direction (D&AD) association Sorrell said "the world of business is moving in a direction that should offer our particular world [marketing and PR] far more exciting opportunities, far more fun and far more beans to count Information, of itself, will only rarely deliver competitive advantage. More than ever before, its what we do with that information that will matter. Our value to clients will be in exact proportion to our ability to take information, to take knowledge, all of it almost certainly known to others, and through a series of creative acts and processes transmute that knowledge into unique and wantable goods, services and systems."
Is this a man prepared to tell the world that "toxic sludge is good for you"? Perhaps. It would be easy to get carried away with your persuasive powers if you could draw on the coordinated manipulative skills that Sorrell has assembled. Certainly his counter-part at the rival advertising and PR giant, Omnicom, has demonstrated a predilection for this type of ambition. In describing what he seems to think is the unbounded tools of persuasion assembled in his conglomerate, John Wren, the President and CEO of Omnicom, has actually boasted to Business Week, "We're the people who can take cosmic dust and turn it into a brand."
Professor Sharon Beder is an honorary professorial fellow at the University of Wollongong.
Sharon Beder's Publications can be found at http://www.uow.edu.au/~sharonb