How would you start the biggest advertising agency in the world?

What have the Olympics, The European Football Championships and the American presidential elections got in common?

Well, if you’re WPP, the world’s largest advertising and marketing group then they are all hopefully going to make it a bumper year for profits.

The WPP Group make a fascinating case study.

On Thursday they released their results for 2011 and they were pretty spectacular.

Pre tax profits in 2011 were 18% higher than the previous year and broke the £1 billion mark for the first time. Revenue also increased by a healthy 5% to exceed the £10 billion level.

2012 is also expected to be a good year for them as “high spending advertising events” such as the Olympics and the US presidential race are all taking place this year. 2013 could be more of a challenge for the company though as there aren’t any of these big spend events on the horizon.

So, WPP are the largest advertising group in the world in terms of revenue and they’ve got an interesting history.

The name WPP originates from “Wire and Plastic Products” which was a UK manufacturer of wire baskets and was nothing to do with advertising.

Back in the 1980s a gentleman by the name of Martin Sorrel (now Sir Martin Sorrel,) who was previously the Finance Director of advertising agency Saatchi & Saatchi, was looking for a listed company to use as a vehicle through which to build a worldwide marketing services company.

He invested in the “Wire and Plastics Products” company but had no intention of owning a wire basket manufacturing company.

No, instead he used it as a vehicle to buy up companies in the advertising field to create a global powerhouse in terms of advertising groups

As the picture above shows, there are numerous brands within the current WPP group and these include some of the world’s largest firms in the areas of advertising such as JWT, Ogilvy Group and Young & Rubicam.

So, there you go. Buy a company that makes wire baskets and you could end up running the largest advertising agency group in the world.

The ExP Group