Mad Men in the Real World. The Story of WPP.

Today, I'm looking at WPP. They are one of the largest advertising agencies in the world and it’s commonly believed some of it’s past executives were the inspiration for the hit TV show Mad Men.

The quick hits:

• Martin Sorrell bought a basket manufacturer for $658K in 1985

• Hostile takeovers of J. Walter Thompson and Ogilvy built the empire

• 400+ acquisitions later, revenue hit $18.7 billion

• Lost the #1 spot to Publicis in 2023 after years of decline

• Now betting $381M annually that AI can save them

A few takeaways:

• The rollup trap: WPP acquired 400+ companies but never integrated them. Result? All the complexity, none of the synergies. Operating margins stuck at 15% despite massive scale.

• Culture beats strategy: When your CEO calls rival CEOs "odious little shits" and gets caught up in brothel scandals, that toxicity cascades. WPP paid $19M in corruption fines across four countries.

• AI plus headcount reductions create complexity: They're spending $381M on AI while cutting 6,000 jobs. WPP is mostly a "people business". Dramatic headcount reductions in a relationship-driven business like this can blow up morale.

The full breakdown shows how WPP's story mirrors every service business at scale: the tension between entrepreneurial freedom and operational efficiency. Spoiler: you eventually have to pick one.

With that, I'll see you tomorrow!

Nick

TL;DR

• Martin Sorrell transformed a $658,000 wire basket manufacturer into the world's largest ad empire worth $19 billion at peak

• Built through 400+ acquisitions but never truly integrated them—maintaining separate P&Ls, cultures, and tech stacks

• Revenue declined 2.3% in 2024 despite $381 million annual AI investment; operating margins compressed from 17.5% to 15%

• Three key competitive advantages: Scale (buying $60B in media annually), Brand portfolio (Ogilvy, Grey, VMLY&R), and Data flywheel (5 billion adult reach)

• Entrepreneurs can learn: rollup strategies work financially but fail operationally without integration courage

The 30,000-Foot View

WPP operates as the world's largest advertising and marketing services company, though it recently lost that crown to Publicis. The business model is deceptively simple: win client contracts, charge 15-20% margins on media spend, and sell strategic/creative services at 40-50% margins.

Revenue streams:

• Global Integrated Agencies (42%): Ogilvy, VMLY&R, Grey

• GroupM media agencies (38%): Mindshare, Wavemaker, MediaCom

• Public Relations (8%): Hill & Knowlton, BCW, Finsbury Glover Hering

• Specialist Agencies (12%): AKQA, design consultancies, production

Key stats:

• Market cap: $9.91 billion (down from $19 billion peak)

• TTM revenue: $18.67 billion

• Gross margin: 83%

• Net income: $799 million (2024)

• Employees: 108,000 (down from 134,000 in 2019)

• Industry: Advertising & Marketing Services

Company History

• 1985: Martin Sorrell invests $317,500 in Wire and Plastic Products plc, a basket manufacturer

• 1987: Hostile takeover of J. Walter Thompson for $566 million shocks Madison Avenue

• 1989: Hostile takeover of Ogilvy Group for $864 million; David Ogilvy calls Sorrell "odious little shit"

• 2000: Acquires Young & Rubicam for $5.7 billion, largest ad industry deal ever

• 2008: Overtakes Omnicom as world's largest advertising company

• 2018: Sorrell resigns amid scandal; Mark Read becomes CEO

• 2023: Loses #1 position to Publicis after years of revenue decline

• 2024: Announces Read departure; Microsoft exec Cindy Rose named new CEO

• 2025: Major restructuring underway, merging agencies and cutting 6,000+ jobs

Show Me the Money

Stand-out financial features:

• Operating profit surged 219% in 2024 but due to one-time gains

• Net debt remains high at $4.6 billion (2.5x EBITDA)

• CapEx declining as company cuts physical footprint

• Free cash flow conversion strong at 85% of operating profit

Financial Data

The N.O.O.B. Nine — Competitive Powers

The Nerd Out on Business Nine is made up of Hamliton Helmer's famous "7 Powers" of competitive advantage (Scale Economies, Network Economies, Counter-Positioning, Switching Costs, Branding, Cornered Resource, and Process Power) combined with two of my own (Data Flywheel and Distribution Advantage).

Average Score: 2.9/5 - WPP has scale and data advantages but lacks true differentiation in an increasingly commoditized industry.

Memorable Marketing

WPP's agencies created culture-defining campaigns, but the holding company itself markets poorly. Key campaigns that showcase capabilities:

Dove "Real Beauty" (2004) - Ogilvy challenged beauty standards, growing Dove from $2B to $4B in three years. Generated $150M in earned media through emotional resonance and social sharing. The "Real Beauty Sketches" became YouTube's most-watched ad with 163M views.

"Share a Coke" (2014) - Grey replaced Coca-Cola logo with 250 popular names, driving 2% U.S. sales increase after decade of decline. Campaign spread to 80+ countries, proving personalization at scale works.

WPP's Own Rebranding Disaster (2023) - Attempted to rebrand media agencies under "WPP Media," causing internal revolt and client confusion. Reversed within months, showing even marketing giants struggle with their own brand.

Tactical Takeaways:

• Test controversial ideas in small markets before global rollout

• Personalization beats generalization even for mass brands

• Earned media often outperforms paid when message resonates

• Don't fix what isn't broken (agency brand equity matters)

AI Uses & Opportunities

Current AI initiatives center on the $381M annual investment in WPP Open platform:

• Production Studio with NVIDIA reduces content review times by 90%

• Open Intelligence analyzes trillions of signals across 5 billion adults

• 21,000 employees completed AI certifications in 2024

Future opportunities remain massive but require cultural shift:

• Automated campaign optimization could cut client costs 50%

• Predictive analytics could identify trending topics before competitors

• AI-powered creative testing could eliminate guesswork

• Natural language interfaces could democratize data analysis

The challenge: WPP cut 6,000 jobs while investing in AI, creating internal resistance. Technology without adoption is expensive decoration.

Bumps in the Road

• 2021 Corruption Settlement: Paid $19.1M to SEC for systematic bribery in India, China, Brazil, Peru

• 2018 JWT Sexual Harassment: CEO allegedly made rape threats; WPP initially defended him

• Sorrell's Exit: Departed amid allegations of misusing funds at brothel (denied)

• Client Losses: Mars ($1.7B), Coca-Cola North America ($800M), Ford creative—all to Publicis

• Integration Failures: $1.52B impairment on Wunderman Thompson, $657M on Y&R, $301M on AKQA

• Talent Exodus: 15,000 employees signed petition against office mandate; key leaders joining rivals

Your Swipe File

What to steal:

• Build a data flywheel—every client interaction should improve your product

• Preserve acquired brand equity even at operational cost

• Invest in one platform/capability at scale rather than spreading thin

• Use financial engineering to fund growth but operations to sustain it

What to avoid:

• Don't acquire without integration plan

• Avoid "synergy" promises you can't deliver—markets remember

• Don't let founders run acquired companies without controls

• Never choose complexity when simplicity would work

• Don't confuse AI investment with digital transformation