WPP business units are encouraged to embrace the technology as rapidly as possible. In addition, WPP has made direct investments in companies such as Broadvision, which Mr Sorrell believe have potential. "Lack of proximity to Silicon Valley is an issue," he says grimly "You even see it in the US. East coast people don't get it as well as west coast people."In response, Mr Sorrell has developed a two-pronged strategy. Units such as Mindshare and Miller Brown Interactive are expected to generate more than $100m in pure Internet revenue this year.Even so, Mr Sorrell is worried about the destabilising effect on his business of the online revolution.
Non-advertising services, growing at above 10 per cent annually, will soon account for more than half of group business. Mr Sorrell also envisages a future WPP whose revenues will be split roughly equally amongst Europe, the US and emerging markets rather than the current 40:40:20 per cent split.Now Mr Sorrell is consumed by the challenge of the Internet. Despite the handicap of being London- and New York-based, he was quicker than most to understand how big an impact the Net would make. WPP already leads the industry in new media, having invested in Wired Ventures four years ago, following with minority stakes in a host of other new media businesses. "The problem with our business is that people don't take us seriously," Mr Sorrell says ruefully.
"They think advertising is a bit of an offshoot from show business." Getting rid of that perception has been one of Mr Sorrell's overriding objectives.As advertising growth has slowed, owing to price inflation in traditional media, notably network television, Mr Sorrell has embraced higher-growth communications services such as consultancy, public relations and specialist communications. "He's gained market share, and raised margins."That goes against the grain of the traditional public conception of advertising, perhaps best encapsulated in the image of flamboyant creativity nurtured by Mr Sorrell's former bosses, Maurice and Charles Saatchi. "They have a combination of respect and fear," says Rupert Faure-Walker, an investment banker with HSBC who has advised Mr Sorrell since the early years. "I don't feel any great pressure." Nor, perhaps, should he, given that WPP is now virtually debt-free, consistently beats growth targets, and is spending surplus cash flow on share buybacks.Despite this more conservative approach, one long-time adviser notes that Mr Sorrell still commands attention from his Madison Avenue rivals.
The group also encompasses public relations with Hill and Knowlton, economic forecasting through The Henley Centre, as well as branding and corporate identity through consulting arms.In recent years, WPP has fallen to number three in size terms, behind the US giants of Interpublic Group and Omnicom Group, but Mr Sorrell is far from perturbed "The size of our business is not a problem," he says. Now worth pounds 6.2bn, WPP still reflects Mr Sorrell's original vision to offer clients a fully integrated service ranging from advertising creation and buying to direct-marketing and strategic consultancy for fast-growth business sectors such as health care and technology. "We certainly find in America that acquisition valuations are quite strong. We find (acquisitions) easier outside America."Aside from global ad agency networks such as JWT and O&M, WPP includes more than 60 communications, marketing and information consultancy businesses, operating in 92 countries. "I think we've got all the resources we need, geographically and functionally, to develop our range of businesses," he says.
"If you go through that sort of experience, it's only natural you would be much more cautious."The intervening decade has won handsome rewards for the WPP shareholders who stuck with him through the dark days. Abandoning big acquisitions, Mr Sorrell has year after year wrung out ever- greater profit margins, while expanding at low cost into fast-growing emerging markets. "It may be having gone through that fairly brutal period I have become more cautious, who knows?" he says. Only the support of his bankers kept him from the firing squad of angry investors.He admits the experience changed his approach and led to greater concentration on minimising risk in group finances. Over the next two years, Mr Sorrell got added financial breathing room through a rights issue and a share reorganisation, but in truth he was lucky to survive.