Sir Martin Sorrell has criticised WPP, the holding company he formerly led, for its weak leaderships and sub-par positions on data and digital.
Sorrell, speaking on the BBC’s The Media Show podcast, explained the shift to a platform-dominated media market and growing import of AI on client-agency-platform relationships were waves that WPP under Read’s leadership had failed to ride. By contrast, his S4 Capital founded by Sorrell in May 2018 and operating brand Monks, were set up with this in mind.
Asked by co-host Ros Atkins whether Read’s departure was a “symptom” of the ad industry struggling, Sorrell had this to say.
“He does. It’s juxtaposed with the loss of a major piece of business, Mars… The timing of his resignation is interesting over the weekend when the Mars loss was announced last night. You have to put those two things together and it follows a string of losses.
“You mentioned WPP was the largest agency, it’s now slipped to number four. It’s more to do with the position of WPP vis-à-vis the competition, Publicis has done extremely well, Omnicom also, but not as well.”
Atkins challenged Sorrell on whether the challenges in the market were the cause of WPP’s relative decline.
“By definition, you have another company that is doing extremely well. Why? Strong leadership, better position on data, better position on digital. The reverse is true in the case of others. Dentsu is struggling a bit internationally, in Japan it’s very strong. Havas is on a smaller scale. IPG and Omnicom are going through a merger,” replied Sorrell.
“It’s demonstrably so [to succeed in these times]. It’s a question of leadership, strategy and structure.”
Riding the AI wave in a new “golden age”
Historian Dan Snow and the VCCP’s managing partner Alex Dalman debated whether AI was ushering advertising into a new golden age. Sorrell was bullish.
“If I think about it historically, the first golden age was around globalisation. We can say that’s finished… You can say it’s checked or stuttering. There’s more fragmentation coming. The other big force has been technology. We’ve had the internet revolution in 90s, we’ve had the smartphone revolution in this millennium and now we’re going through an AI revolution. It’s not just an AI revolution, it’s around quantum computing and blockchain. I don’t get crypto but it’s gaining increasing relevance for good or bad,” he said.
“[AI] heralds a different era and I think it’s a new golden era. S4 is focused totally on the digital age. To put in perspective, our industry is a trillion-dollar industry globally, about $700 billion of that is in digital and $300 billion is traditional, free-to-air TV, newspapers in the old form. The traditional industry is going backwards 0-15 per cent depending on if you have live sports or not, the digital piece is growing 10-15 per cent dominated by Google, which out of that trillion is $250 billion of ad revenue. Meta’s $150 billion, Amazon is $60 and TikTok outside China is $40 billion. Those four platforms are half the market and 70 per cent of digital.
“[S4] We’ve consistently said, since inception, that the market is moving to a platform-dominated market. The four companies I mentioned, plus Alibabi and Tencent, three in the East and four in the West, would dominate the industry and the investment needed for AI which is about half a trillion dollars a year… We’ve consistently said those platforms will dominate and the role of the agency is the validator for the algorithm. Traditionally, you wouldn’t go to Rupert Murdoch and say ‘Is my media budget invested?’ You wouldn’t go to Mark Zuckerberg and say the same. Meta is 15 per cent of the industry. What you’ll do is look at the algorithm and what it spits out in terms of a solution and then you will ask an agency or third-party independent to validate it.”
Consider yourselves told.
