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Marshall Cooper the executive vice president at Consultants News estimated that top firms like McKinsey and Boston Consulting Group earn profit of at

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Marshall Cooper, the executive vice president at Consultants News, estimated that top firms like McKinsey and Boston Consulting Group earn profit of at least 20 per cent of revenue. By contrast, WPP's first- half operating profit was 11.5 per cent of revenue.Sorrell knows marrying consulting with advertising won't be easy. That's why he wants to set up a separate unit, one he thinks won't be tainted by the rap that agencies are only good for making 30-second television commercials.Then there's the problem of the "McKinsey mafia", the network of contacts that high-priced consultants have among their former business school colleagues at many of the world's leading companies. "The advantage that the management consultants have is that they tend to talk to the higher reaches of the company," Sorrell says. "If McKinsey made a call to me, I would take the call."Until recently, Sorrell was trying to expand WPP's presence in strategic consulting through the Henley Centre, part of WPP's specialist communications division, which accounted for a fifth of WPP's 1997 operating profit. But Sorrell concluded that Henley was too focused on economic forecasting and not focused enough on consulting.

So he looked for consulting firms, focusing on those specialising in retailing, technology, entertainment and media, financial services and health care.In February, WPP bought Management Ventures, a Massachusetts-based company that provides marketers with information about the world's biggest stores and retail chains. WPP didn't say how much it paid for the firm, whose net assets were $538,740 at the end of 1997.In March, WPP bought two US marketing consulting firms that specialise in research for technology companies: MSI Channel Research LLC of Seattle and Charles River Strategies Inc of Boston. Buying the companies, the net assets of which were $2.5m at the end of 1997, boosted WPP's hi-tech billings in its communications division by $70m to more than $250m.Sorrell says any more acquisitions he makes will be "small-scale and very specialised" He declines to say how much he's willing to spend. He insists he won't repeat the mistakes made by his former employer, Saatchi & Saatchi, in the 1980s.

Maurice and Charles Saatchi bought a string of firms that specialised in everything from employee pay to litigation research as part of a drive for "world market leadership" in consulting.Sorrell was the finance director at Saatchi & Saatchi when it bought Hay Group, its first big consulting firm, but he said he wasn't influential in the decision to move into consulting. He said the Saatchi brothers got sidetracked by not sticking to firms that specialised in marketing advice.Sorrell says he's not about to try to buy McKinsey or any other big strategy shop. He's worried that the partners of such a firm, reluctant to work for a big company, would pocket their share of the takeover price and leave. Besides, he adds: "I don't think we'd be very good at running a consultancy.'' Instead, he says WPP might just take a stake in a consulting firm - although he does not say if he has one in mind.That approach could backfire, says Jim Kennedy, the founder and former editor of Consultants News. Kennedy says he's studied consulting firm acquisitions since 1984.

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