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The advertising industry has been through so many changes that it's easy to forget what it was like when Martin Sorrell bought JWT in 1985 with borrowed money. He knew that JWT, like all agencies at the time, was extremely well paid by its clients, and that its high income permitted the agency to spend lavishly on salaries, headcounts, bonuses, parties and new business development. JWT's meager 4 percent profit margin signaled that costs were "fat" and could be cut.

Sorrell was not trying to get into the agency business

Instead, he wanted to build a diversified financial conglomerate that bought well-paid, cost-rich companies, like JWT. Diversification by marketing type would balance risk. WPP's real goal was to deliver growing income and improved margins to WPP shareholders, who would benefit from rising share prices. Improved performance would be achieved through tough budget negotiations with acquired companies., with a focus on reducing their excess costs. WPP became expert in buying companies and squeezing better performance out of them through annual budget negotiations.

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