Shares in both ITV and WPP have fallen dramatically following their latest results. In both cases, this can be put down to the habitual complacency of a market leader. Neither business has been quick enough to restructure, nor trail-blazing in its digital offering. Neither have understood the major threats to their businesses through the duopoly of Google and Facebook.
So while there are obvious similarities in the business failings, the stories at the top of the businesses differ markedly. WPP is still helmed by its leader of 32 years, Martin Sorrell. ITV, after years of Adam Crozier’s stewardship, has a new CEO in Carolyn McCall.
McCall, the former CEO of the Guardian, has most recently been running EasyJet. She has seen advertising as both seller and buyer, and has hands-on experience of the value of data in her last role. As Simon English points out in the Standard, McCall is
better placed to realise the digital potential than Crozier: she understands that the value lies not just in the inventory, but how that asset is targeted towards its customer base. That is where insightful use of data can add real multiples. Moreover, McCall has inherited the major innovation of Crozier’s tenure: ITV Studios is now a real powerhouse of production in an age when unique content is key.
Sorrell has deeper problems. He is an habitual under-cutter, a leader who sells on price rather than value, and has built a structure within the business which does not encourage cross-fertilisation or integrated thinking, both of which are abundantly necessary if the duopoly is to be beaten at its own game. While he has been a shrewd buyer of traditional agencies, his forays into data have been somewhat sub-prime: Kantar struggles to match the insight offered by Dunnhumby, for example. WPPs Datalliance project is a poor substitute for real innovation. Further, the problems of Maplin and Toys ‘R’ Us point to a declining consumer confidence which will challenge WPP’s model.
Nonetheless, the equation for both businesses is relatively straightforward. They have (or represent) physical and digital assets which can work together, and have the means to harvest and resell valuable data on clients’ customers. They need to stop selling on yield and push the value proposition. They can do this best by making their disparate business components work closely together and by having a much better understanding of their customers’ needs – gathered and presented through better use of data, but also through proper qualitative research. The challenge is that that these simple formulae require fundamental change to the way both companies do their business.
As media headhunters, we talk a lot about appetite. Our clients look for ‘hunger’ in their leaders, whatever stage they are at in their careers: the desire to push on through all reasonable barriers. Both McCall and Sorrell share this characteristic in spades. Both have shown signs that they have recognised the structural problems within their businesses, and have the willingness to address them. Both have the energy and single-mindedness to push forward. The question is whether they fully understand the challenges that the current media landscape presents.
I would not bet against them. In the spirit of reckless prediction, I would lay even odds that their shares will have recovered to their most recent highs by the end of the year. Fundamentally, their market-leading positions should guarantee positive results if managed properly. And both McCall and Sorrell have shown that they are smart enough – and bloody-minded enough – to see those changes through.
Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work in the TMT (technology, media, and telecoms) space, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.
Image from Hazel Simpson, via Flickr.