Cable Satellite International
WPP founder and CEO Sir Martin Sorrell was unapologetic about the impact on traditional media of his company’s rising spend with Google. He also sees a golden opportunity for people ignored by Western brands.
http://www.csimagazine.com/csi/WPP-Sorrell-ups-online-spend.com.php
“Legacy business models are under attack," he said in a IBC keynote address. "There is huge disintermediation. Some of the valuations for these tech companies are way off the charts. It is unsustainable … and they steal your talent."
In a wide ranging speech which highlighted his boardroom nous, Sorrell talked about Brexit (“damaging”), Trump (“a risk”) Amazon (“watch out”), world geopolitics and pointers on how to succeed in business.
“Google and Facebook account for 76 per cent of ad growth,” he said. “We will be supportive of Snapchat, AOL/Yahoo and others [in their efforts to grow their share of digital advertising]. A duopoly is not what our clients want.”
“They have advertising inventory which they monetise. These two cannot be both referee and player. If you believe time spent engaged with media is the correct metric then how do you equate a typical 40 minutes spent reading a newspaper with 3 seconds spent watching an online ad which perhaps has the audio turned down? This cannot equate with a 15 to 30 second spot on TV.”
On behalf of its clients, WPP’s spend on Google will rise this from $3.3bn in 2015 to $5.5bn this year - a substantial part of the firm’s $75bn in annual billings. WPPs Facebook spend stands at $1.5bn up from $1bn.
“And while all the focus is on Google and Facebook, the big one coming is Amazon,” he warned.
Sorrell poured cold water on the suggestion that WPP would, like Havas, buy into media or become part of a larger media focussed entity.
WPP represents by his reckoning between a quarter and a third of the total advertising media services market. It has a market capitalisation of $30bn makes about $2.5bn profit and employs 194,000 people across 113 countries.
“It is this breadth of talent which clients want access to, not the 20,000 or so who might work in one agency,” he said.
“Clients are not interested in individual brands (he cited WPP’s own agencies like Grey and Ogilvy). Our clients are interested in getting the best people in those brands to work for them.”
So for certain global clients - Ford and Colgate among them - WPP has united all its agencies to work on one account.
He has some lessons from the top for fellow CEOs. “The bigger you get the greater the perception is among clients that you can’t cope.”
Sorrell was also exercised by the need to refresh and retain talent “otherwise your rivals will simply steal them.” The WPP Fellowship programme recruits from a wide number of art, design and technical colleges worldwide and puts new members on an intense multi-disciplinary course.
“We want to create multidisciplinary experts,” he said. “The biggest indictment of our industry is that we don’t grow it. We steal it. You win a piece of business, you steal the talent. It just bids up the price of labour against you. The only way to survive and prosper is if we organically grow talent and embed fresh talent in our organisation.”
Sorrell also impressed with his international outlook. Rather than being UK, Europe or US-centric, he earmarked countries like China, Argentina and Iran as economies to watch.
“In the next decade, the key countries in the world will be China, the US and India - though India may well be second. Indonesia will surpass the US in population. The balance of power is changing,” he decreed.
He noted that the Muslim population by 2050 will be 30%, almost equal to the world’s Christian population.
He made the point that here are a vast number of people largely ignored by western media and western brands who represent a golden marketing opportunity.
“Legacy business models are under attack," he said in a IBC keynote address. "There is huge disintermediation. Some of the valuations for these tech companies are way off the charts. It is unsustainable … and they steal your talent."
In a wide ranging speech which highlighted his boardroom nous, Sorrell talked about Brexit (“damaging”), Trump (“a risk”) Amazon (“watch out”), world geopolitics and pointers on how to succeed in business.
“Google and Facebook account for 76 per cent of ad growth,” he said. “We will be supportive of Snapchat, AOL/Yahoo and others [in their efforts to grow their share of digital advertising]. A duopoly is not what our clients want.”
“They have advertising inventory which they monetise. These two cannot be both referee and player. If you believe time spent engaged with media is the correct metric then how do you equate a typical 40 minutes spent reading a newspaper with 3 seconds spent watching an online ad which perhaps has the audio turned down? This cannot equate with a 15 to 30 second spot on TV.”
On behalf of its clients, WPP’s spend on Google will rise this from $3.3bn in 2015 to $5.5bn this year - a substantial part of the firm’s $75bn in annual billings. WPPs Facebook spend stands at $1.5bn up from $1bn.
“And while all the focus is on Google and Facebook, the big one coming is Amazon,” he warned.
Sorrell poured cold water on the suggestion that WPP would, like Havas, buy into media or become part of a larger media focussed entity.
WPP represents by his reckoning between a quarter and a third of the total advertising media services market. It has a market capitalisation of $30bn makes about $2.5bn profit and employs 194,000 people across 113 countries.
“It is this breadth of talent which clients want access to, not the 20,000 or so who might work in one agency,” he said.
“Clients are not interested in individual brands (he cited WPP’s own agencies like Grey and Ogilvy). Our clients are interested in getting the best people in those brands to work for them.”
So for certain global clients - Ford and Colgate among them - WPP has united all its agencies to work on one account.
He has some lessons from the top for fellow CEOs. “The bigger you get the greater the perception is among clients that you can’t cope.”
Sorrell was also exercised by the need to refresh and retain talent “otherwise your rivals will simply steal them.” The WPP Fellowship programme recruits from a wide number of art, design and technical colleges worldwide and puts new members on an intense multi-disciplinary course.
“We want to create multidisciplinary experts,” he said. “The biggest indictment of our industry is that we don’t grow it. We steal it. You win a piece of business, you steal the talent. It just bids up the price of labour against you. The only way to survive and prosper is if we organically grow talent and embed fresh talent in our organisation.”
Sorrell also impressed with his international outlook. Rather than being UK, Europe or US-centric, he earmarked countries like China, Argentina and Iran as economies to watch.
“In the next decade, the key countries in the world will be China, the US and India - though India may well be second. Indonesia will surpass the US in population. The balance of power is changing,” he decreed.
He noted that the Muslim population by 2050 will be 30%, almost equal to the world’s Christian population.
He made the point that here are a vast number of people largely ignored by western media and western brands who represent a golden marketing opportunity.
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