“Effectively, there’s an IMG inside WPP,” he said. “If we pulled out everything we had in sport, we would have far more than IMG’s revenues.”
It’s no surprise Sir Martin turned to IMG as his point of reference. The company may have grown to incorporate modelling and strands of non-sporting media content, but its heritage lies firmly rooted in sport; IMG is seen as a sports company while, despite its scale, capabilities and its billings associated with sport, WPP is not.
Sir Martin knows all about IMG. He once worked there and considered an offer when it was up for sale but decided the asking price was too high. But Sir Martin has a thing for sport and entertainment and is a champion for its power in marketing. Consequently, he’s been anxious to find a way of harnessing the expertise and relationships of his $19-billion-a-year network of companies in the sports space.
What WPP appeared to need was a clearly-branded and specifically-focused offering for the world of sport. So it hardly required the gift of one variant of ESP, Extra Sensory Perception, to anticipate last month’s launch of another: ESP (Entertainment, Sports and Partnerships) Properties and ESP Brands, WPP’s joined-up, co-ordinated and precisely-targeted move into the space.
At the same time, the company underscored its serious intentions by announcing it had taken a majority holding in Two Circles, the data-driven sports marketing company that last year disrupted the hegemony of the big boys when it was named agency of the year at the UK’s Sport Industry Awards.
ESP Properties could be the tide that raises all ships without floating everyone’s boat
Data has been described as the new rock ‘n’ roll of sports marketing, so bringing Matt Rogan’s operation inside the ESP tent is a smart move. Most of Two Circle’s existing business appears to be UK-based but the principles, philosophy and expertise of the company make it relevant to the worldwide marketplace, and that’s where WPP holds the key.
The big questions are whether ESP Properties and ESP Brands will succeed, and what influence they will have on the sports marketing sector as a whole. In cases like this, there is always a temptation to revert to ‘seen it all before’ mode. You’ll remember, for example, that Octagon was more or less the brainchild of advertising guru Sir Frank Lowe and launched as a way to unlock the latent profit potential of sport by leveraging the capabilities and connectivity within Interpublic, another global marketing group. While Octagon is a major player, there’s an interesting discussion around whether or not it got there by fulfilling Sir Frank’s vision.
Both ESP Properties and ESP Brands start off with what should be a significant advantage, given the connectivity of the network of WPP companies with leading global brands. By leveraging these brand relationships and the consultancy expertise within its existing specialist units it should have a strong offer, while its massive spending in TV markets worldwide should give ESP Properties significant influence when it comes to distribution deals for its clients and their events.
But some of those who have watched and even been involved in the development of WPP over the years have certain reservations. They highlight the need to maintain separation between its two operational arms to avoid the potential clash of interests which results from ESP Properties selling rights to brands whose strategies are being run by ESP Brands.
That’s hardly a new dilemma in sports marketing. But the scale and connectivity of WPP across the brand world means there is a potential for some clients to feel at least a little discomfort about being in the middle of a situation where the same entity is advising, buying and selling. That could be bad for business in the long-term.
Another area of concern is the very ethos that drives shareholder value in WPP, which is value every one of its companies is required to contribute to. The group has been built by maximising value from the companies it was able to buy at the right price; Sir Martin is not known as a risk taker, yet the property side of the sports industry has been built on the willingness to make minimum financial guarantees to acquire rights to retail at a profit.
The impact ESP has on the future shape of the sector may come down, in part at least, to the extent of its appetite for this sort of investment, particularly as the added competition of a new player entering the market is likely to drive prices northwards.
Given Sir Martin’s personal and professional attachment to sport and the latent potential within WPP, it feels as though this move has been a long time coming. What is certain is that ESP Properties and ESP Brands will bring fresh competition to the sector, rattle a few cages along the way and maybe introduce fresh-thinking and approaches that will, ultimately, benefit everybody.
So it’s possible that it could be the tide that raises all ships without floating everyone’s boat.