Last Updated Sep 14, 2009 4:20 PM EDT
- UPDATE: Reuters has published this curious correction, which suggests that the consolidation is something Sorrell only wants to see happen over the next 10 years, and is not imminent.
We have five (advertising) agencies. It is ludicrous that you don't have a common back office. It is the same business...
We aren't doing enough. There are colossal savings for our clients and ourselves ... My ideal is you have one back-office for all the brands within 10 years.Here's the money-quote. It's almost a threat:
Those people who can't get their mentality around it, probably in the end, will have to go...So, if you're one of those Don Draper-esque mandarins at Grey Group, Ogilvy & Mather or JWT who thinks that creatives need their time at the Soho Grand in order to function properly, you may find yourself surplus to requirements over the coming years.
BNET noted that Sorrell told Wall Street in August that layoffs were planned:
Continuation of attrition should also support savings for H2 2009 and full year 2010If you look at the numbers, you'll see that Sorrell is actually late to the game in terms of cost-cutting inside his shops. Salary expenses at WPP were Â£2.6 billion for the second half of 2009. They were Â£2 billion in the prior period last year. Muddled in there is the TNS acquisition, but whether you factor TNS in or out, the revenue yield on each pound WPP spends on salaries declined. The actual yield declined from Â£1.67 to Â£1.61. The like-for-like declined even further.
Which is to say, TNS made WPP a less efficient network, and the underlying network was also becoming less efficient as the months went by.
There's probably little room for cutting non-salary costs because salaries are by far the majority of WPP's expenses. Total operating expenses rose by about Â£1 billion for the half, including the TNS acquisition, and about Â£700 million of that was salary budget growth alone.
The good news? Sorrell seems to think the youngsters are up for it:
... the younger the people are that you talk to, the more enthusiastic they are about these opportunities of working together.
- See previous coverage of WPP:
- WPP Q2: 7,800 Jobs Gone; More Layoffs Promised; "Apocalypse Averted"
- WPP Is at "the Brink of Junk," Says Moody's; Sorrell Pushing Debt Envelope
- WPP's Sorrell Sets Up Best of All Worlds for Wednesday's Revenue Report
- Sorrell Between Rock, Hard Place as He Balances Debt, Stock and His Own Pay
- Did You Check Out WPP's Line of Bath and Kitchen Products?
- Wall Street Downgrades WPP on Debt Fears; Has Sorrell Reached His Credit Limit?
- Citi Cuts WPP to "Sell"; Sorrell Defends "Suicide Pact" on Pay; Attacks Obama on Taxes
- Sorrell's Comments on Procurement Reveal Opacity of Agency Billing Practices
- WPP: Sorrell Sees No New Client Dollars; Layoffs Possible in Europe; Zimbabwe Eyes an Opportunity
- Could WPP Chief Sorrell's Successor Be Lord Stephen Carter?
- Sorrell Prepares to Leave WPP Amid 7,000 Layoffs