WPP's Digital Push

The ad and marketing giant appears to have a head start on rivals, but CEO Martin Sorrell doesn't think it's digital enough

By Jennifer L. Schenker

Walking around in a black T-shirt and jeans at a beach resort near Athens, Sir Martin Sorrell looks impatient. Then again, this is no vacation. The chief executive of London advertising and marketing giant WPP (WPPGY) has gathered 250 staffers and other "smart people" together in Greece to brainstorm about the future.

Right now, a select group is huddled in a room listening to an executive from Britain's Guardian newspaper give a presentation entitled "Oh My God, the Internet Ate My Business!" There's an orchestra conductor and juggler on site to get peoples' creative juices flowing. Middle-aged ad execs and young Internet entrepreneurs play with Nintendo Wii consoles and various other gadgets nearby, acutely aware of Sorrell's missive to "think open source, think Wikipedia."

For Sorrell, 63, the annual October conference is part of a broader strategy to make the $15 billion agency a leader in the emerging world of digital communications. While WPP has spent more than $1 billion in the past three years buying up digital media companies, such as New York search-engine marketing firm 24/7 Real Media, Sorrell frets it's not enough. "We don't believe, given the pace of activity in digital and online, that our existing businesses can move fast enough," he says.

like there's no tomorrow

In addition to setting up a new business unit a few years back called WPP Digital, Sorrell is now pushing for every one of his 133,000 employees—along with the 15 heavyweight members of his board—to embrace digital technology like there's no tomorrow. Even the global financial turmoil, which whacked 45% off of WPP's stock price last year, isn't distracting him from that mission.

No one is being spared in the push. At an Oct. 20 board meeting in Palo Alto, Calif., Sorrell had all the directors—including himself—learn how to upload video and create their own Facebook pages. (Sorrell hasn't kept his going, but others have.) Mark Zuckerberg, Facebook's founder, personally helped give them a primer. The directors had fun, but the exercise was meant to help them fully grasp the phenomenon of social networks and how they may affect the ad business.

"This meeting brought home how much digital technologies are accelerating the rate of change in WPP's businesses and markets and the importance of adapting to stay apace of the curve, if not ahead of it," says Jeffrey A. Rosen, a WPP nonexecutive director and deputy chairman and managing director of investment bank Lazard LLC, a subsidiary of Lazard (LAZ).

old habits die hard

At first glance, it might seem Sorrell's concern about falling behind is misplaced. Since transforming WPP from an unprofitable shopping-cart company into the owner of such ad giants as JWT (formerly J. Walter Thompson), Y&R (Young & Rubicam), Ogilvy & Mather, and Grey Group, Sorrell has turned his attention to making it a major force in the digital realm. More than 50% of the company's 2008 revenues are expected to have come from Web marketing and sources other than traditional TV, radio, and print.