How an accountant built the biggest ad agency of the world
A tale of the merger of creativity and business.
Today’s story is about two legendary men who changed the world of advertisements. While one had ads flowing through his veins, the other had nothing to do with it. While one started the most iconic ad agency, the other simply acquired it. Whatever be the case, both their roles have been critical in building Ogilvy and Mather (O&M) as we know it today.
So, without further ado, presenting to you the story of a mad man and a math man. Read this one till the end. You will love it, promise!
David Ogilvy, born in a middle-class family, was an explorer at heart. He tried his hands at many things, and every experience just took him a step closer to becoming the legend that he was.
Like several other legendary folks, Ogilvy was also expelled from college. After being expelled, he started his career at the age of 20 as an apprenticeship chef. Here, he learned the art and the importance of perfection.
But soon after, destiny guided him to a new job. He started working as a stove salesman, a job that he absolutely nailed! Impressed by his work, his employer asked him to write a handbook for his fellow salesmen. The handbook became so very popular that he was offered a job in an ad agency.
Aah! The Holy Grail, finally?
Well, Ogilvy still had some more exploring to do.
He worked for George Gallup (a famous statistician who invented a successful method of survey sampling) and picked up the importance of deep research. Before turning to advertising again, he served in the British Intelligence Agency during World War II.
As if all this was not enough, he even tried his hands at farming!
And then he arrived - and how!
Armed with his learning and experiences, he was ready to change advertisements as was known to man. In the year 1948, at the age of 37, he started his ad agency with the backing of his former employers, Mather and Crowley.
He made legendary ads (for companies such as Hathaway Shirts and Rolls Royce) that created storms. The products would fly off the shelf, and more and more companies came to O&M for Ogilvy’s magical touch. He emphasized that the consumer should not be considered a moron and their intelligence should not be insulted by mere slogans. He believed in writing detailed copies (deep research and perfection, you see!) so that the consumer can make an informed decision.
Ogilvy created an enviable brand and happily retired in 1985.
As one legend stepped down, somewhere, another legend had started taking baby steps in the ad-world.
Someone not from an advertising background, but creative nonetheless. An outsider. A finance guy, with a knack for successful takeovers.
Martin Sorell.
For 9 years, Sorell worked as the CFO at Saatchi & Saatchi, an ad agency. At that time, Saatchi & Saatchi was trying to grow through mergers and acquisitions. In his words,
"People tend to think that advertising agencies succeed or fail on creativity alone, but financial control is equally essential."
Year 1985. Martin decided that time was ripe for him to create something big. With a $2 million stake in Saatchi & Saatchi, a rich experience and reputation, he started building his empire at the age of 40.
In the first 2 years, he made a whopping 18 acquisitions via his company WPP. His focus was unwavering. The industry of choice for all those acquisitions was marketing. At first, he chose the less glamorous marketing companies that were involved in packaging, design and promotions. But after 2 years, he made his first strike in the ad world. He acquired a big ad company, JWT, valued at $250 million, at a price of $566 million.
The man was unstoppable. 2 years later, he made his second strike and acquired O&M for $864 million in the biggest ever deal to purchase stakes in an advertisement company.
Now, now. David Ogilvy might have retired, but his words had immense authority. And of course, he resented the deal! The acquisition wasn't straightforward. It was a hostile takeover.
The Takeover
Before the offer was disclosed, the shares of Ogilvy were trading at $32. An offer was made for $45 a share. Soon after, the stock price jumped to $53.25 and the deal was closed at $54.
The tender was floated and the deal got its blessings from the shareholders. All this, while David helplessly pleaded,
“I started that agency without a nickel...Then, this bookkeeper comes along and tries to buy the thing. Can’t he be stopped?”
But soon, Martin Sorell won over David. Martin not only gave full autonomy to the company for running the show, but also made David the non-executive chairman of the WPP group. (Perhaps, the two men clicked on their passion for detailed research and perfection?)
But, what was so historic of what Sorrell achieved?
At the time when Sorrell stepped in, advertising was a cottage industry, run by creative people in small-small entities. Ideologies were considered to be a big asset in the creative space. Mergers risked the dilution of this very soul, thus threatening the existence of the Company.
Sorrell changed that perception.
He proved that processes had a place in the creative world too. And because of him, the ad world has never been the same.
Both Sorell and Ogilvy played pivotal roles in establishing advertising as we know it.
One with words, the other with numbers.
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Yes, processes matter
Hi. An easy & informative read. Just fell a little short of loving this article but liked it tremendously. Thank you.