Sorrell: The Holding Companies Are In “Deep Doo-Doo” As We Head For A “Darwinian Culling”

Sorrell: The Holding Companies Are In “Deep Doo-Doo” As We Head For A “Darwinian Culling”
B&T Magazine
By B&T Magazine
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Sir Martin Sorrell was back to his rabble-rousing best over the weekend, telling media that CV-19 would put an end to a number of inefficient businesses in what he described as a “Darwinian culling”.

The former WPP supremo and now CEO of his latest venture, S4, believed only the strongest companies would pull through the global pandemic in a survival-of-the-fittest fight that he compared to Charles Darwin’s theory of natural selection.

“You feel it in the markets already. It’s terrible, shocking, it’s catatonic. A lot of companies will go down,” Sorrell predicted of CV-19’s aftermath.

“This is a Darwinian culling,” he said, his comments reported on UK’s This Is Money.

Meanwhile, the 75-year-old media sage has used a separate interview to reignite his vitriol against the traditional holding companies.

Sorrell likening the parlous state the world’s biggest media firms now face themselves in as being in “deep doo-doo”.

Once again, Sorrell attacked the big six – WPP, Omnicom, IPG, Publicis, Havas and Dentsu – for being “too big” and “lacking focus” – something he said could prove fatal in the current era of CV-19.

“The six holding companies are really in deep doo-doo, because they can’t get away from their analogue businesses,” Sorrell told industry site Campaign Asia. “If you’re an analogue business, you have to reposition yourself rapidly. You have to blow things up.

“It’s the old cannibalisation argument: if you don’t eat your children, somebody else will. In this case, if you don’t change your organisation, it’s going to change for you – it’s going to be out of your hands.”

Sorrell added that an old-school mentality among the holding companies meant they were often burdened by ECDs being paid as much as $US5 million annually when the future lay in the hands of digital directors who were paid 20-times less.

He added: “The forces are keeping the costs high in the traditional business when the revenues are declining quite rapidly.

“It’s a bit like saying: why is it that the car companies can’t compete with Tesla or why is it that the banks can’t compete with fintech companies? Often they’re so big, they can’t get out of their own way,” he said.

As is often the case, Sorrell used the interview to slam his rivals all the while spruiking the merits of his latest offering, S4.

He said that as traditional businesses would continue to cut ad spends in traditional media such as TV, Sorrell said S4’s major client base – digital and tech-savvy companies – were “spending more money” in the digital space.

Sorrell again reiterated previous comments were he said 2020’s second quarter would be a disaster for ad spends, but believed there would be a sharp uplift leading into Christmas. He added that S4’s senior management had all taken 50 per cent pay cuts during CV-19 while the company had “reduced but not frozen” its level of hiring.

He concluded that working from home could become the new norm, which would also have enormous benefits for agencies paying large rents.

“We’re already cutting our leases, not just because we want to reduce those costs in C19, although that’s part of it, but because we see a distinctive change in the pattern of working, and our people are saying that they prefer working from home,” Sorrell said.

 

 

 

 

 

 

 

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