If one only reads the advertising industry’s trade press, one might assume that the industry is not only facing significant structural challenges but could be in the midst of an existential battle.
But Sir Martin Sorrell, executive chairman of S4 Capital – owner of operating agency brand Monks, told industry figures during Cairns Crocodiles, presented by Pinterest, that the advertising, marketing and media industries are more interesting than they’ve ever been as a result of those challenges. And where there is challenge, there is opportunity.
At the same time, the industry is more demanding and demands different things of its staff and businesses than previously.
“It’s really demanding. But it’s very different. Unfortunately, I think our industry looks back with rose-tinted spectacles at the Don Draper and Mad Men era. It thinks back to those times, tries to recreate them, and the simple fact is that things have changed,” Sir Martin told B&T editor Tom Fogden on stage.
“The industry is more interesting than it has ever been. We’ve gone through several waves of geographical and technical change, but the skills demanded today are totally different to the skills that were demanded when I started with Saatchis and then with WPP and now with S4.”
Sorrell joined Saatchi & Saatchi in 1975 and served as its group finance director from 1977 until 1984. After leaving WPP in 2018 as the largest advertising holding company in the world, he acquired S4 Capital and later Media.Monks, now simply Monks.
“It’s great to be in the industry, but unless you really understand the differences, it can be very, very challenging.”
Previously, agencies were living through an era of globalisation and seizing the initiative in global expansion was paramount. In the late 1990s, Sorrell said, the industry started to be affected by the first wave of technological changes, which it is still living through.
The next wave of changes, however, will involve “impenetrable” geopolitical challenges, which will “bedevil” the industry for the foreseeable future and marketers and agencies alike will need to contend with a world that grows “more slowly” than before.
Russia and Iran will continue to be headaches for the West and, as a result, the liberal, capitalist society in which advertising thrives. But China presents a “structural” challenge for America and, ergo, most of the West. It’s no surprise that President Xi recently described China’s relationship with the US as a Thucydides Trap.
The world’s centre of power is shifting too. North and South America alike are “underestimated” in Sorrell’s view. Africa, he said, is experiencing more conflicts than ever and “therefore very volatile”.
By 205, three of the world’s major economies will be within the Asia-Pacific region, according to Sorrell: China, India and Indonesia. The other two will be the US and Germany.
The Middle East is under pressure at the moment, but he expects it to bounce back. Europe, meanwhile, is in “structural decline”.
“My own country, the UK, [as well as] France, Germany, Italy and Spain are all under structural pressure,” he said.
In this context, technology becomes far more important as inflation becomes more stubborn and interest rates remain higher because of the downward pressure they put on supply chains.
To navigate these changes, the world’s holding companies must move away from their traditional, siloed models which were constructed to isolate client work between different agencies and to a more integrated model. In his view, S4 and Publicis’ focus on servicing geography, then client, then capability, should continue to pay dividends as the market changes.
The day before Sorrell spoke at Cairns, S4 Capital issued its Q1 2026 financials.
“We’re seeing stabilisation and a little improvement among technology clients,” Sorrell told analysts on a call, adding that S4 is now assuming broadly flat revenues in its technology services division after what he described as a “rough two years” for the practice.
“Nobody thought it was possible to have three competing packaged goods companies in the same operation. But with their agreement, we managed to do it by having the separate brands. That largely has gone away because of the pressure on fees and compensation,” Sir Martin said in Cairns.
“S4 is basically a disruptor. We will succeed or fail on the implementation of AI at scale. To date, we are seeing AI implemented and transforming at scale in three verticals,” he said, with the verticals being automotive, financial services and to a lesser degree, packaged goods.
The automotive industry is in the midst of its most significant shift since perhaps the end of the war, as Chinese automakers disrupt established European, American and Japanese marques and electric vehicles continue to gain share in the market. The financial services industry is facing significant insurgency from fintech players and challenger brands, including Airwallex, Revolut and Up Bank.
The packaged goods industry, meanwhile, is facing its problems from supply chains.
“The packaged goods companies during and after COVID drove their prices up, without naming names… by 10, 15 or 20 per cent per annum…. They’ve come under huge volume pressure as a result. Commodity prices are increasing, to some extent driven by tariffs and the war in Iran. That’s driving them into a situation where they have to improve their efficiency. Again, it’s an existential threat.”
It might not be pretty. But Sir Martin is certainly right, it’s going to be an interesting time to be in advertising.
