Veteran dealmaker Sir Martin Sorrell is left stranded

Advertising’s biggest dealmaker finds himself uncharacteristically sidelined in the biggest deal in the sector’s history.

Sir Martin Sorrell, chief executive of WPP, built the former wire basket company into the industry’s largest holding company through acquisitions of famed creative agencies such as Ogilvy, J Walter Thompson and Grey Global. He also broadened its business into market research, emerging markets and digital marketing.

Yet he risks finding himself in second place if the planned merger of Publicis and Omnicom goes ahead, creating a group with 2012 revenues of $22.7bn compared with WPP’s $16bn.

The WPP boss made clear his view of the deal in a CNBC interview on Monday morning, citing the merger codenames for Publicis and Omnicom, Purple and Orange. Mix the two together and you get “a muddy brown or grey colour”, he quipped.

Sir Martin’s competitive streak is particularly acute when it comes to his rivalry with Maurice Lévy, Publicis’ chief executive, and a recurrent question among agency executives across the industry was: “What’s Martin going to do?”.

Reporters at the press conference announcing the formation of Publicis Omnicom Group could not resist asking how the two companies expected him to respond.

“Martin Sorrell is a strong competitor, a very strong competitor, we respect WPP enormously,” Mr Lévy said. But he added: “We do not define our strategy as regard to what he will think or what he will do.”

Sir Martin poured faint praise on the deal as “extremely bold, extremely brave” and “very surprising”, singling out Mr Lévy for “all credit and bouquets” for the deal he secured for Publicis shareholders.

As for what he would do, Sir Martin played down the need for WPP to respond, saying it would still lead the European and Asian markets and the deal would only create significant scale in the US where regulators would “take a good hard look at that”.

WPP had several ways of responding, Bernstein Research analysts argued. It could replicate the Publicis-Omnicom strategy and buy another large agency group such as Interpublic or Havas. “But we think that Sorrell is a sophisticated thinker who may well look elsewhere,” the analysts said.

Instead, WPP could expand further into data services and consumer insight by targeting market research companies such as Nielsen, GfK or Ipsos. A deal with one of the large software groups was another option, they said, but control could be an issue if WPP were the smaller partner.

Sir Martin steered people the other way, saying those speculating about further acquisitions larger than its recent bolt-on deals were looking in the wrong direction.

Instead, he argued, WPP could grow organically, by picking up clients and talent that fall out of the new market leader, and by pursuing its four-pronged strategy of focusing on faster-growth countries, digital business, consumer insight and pushing its divisions to work together.

“There are massive opportunities for us to grow organically,” he said.

Whichever route he chooses, few believe the WPP boss will be satisfied at being number two for long.