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Legacy countries & businesses are uncomfortable with change: Sir Martin Sorrell

Legacy countries & businesses are uncomfortable with change: Sir Martin Sorrell

Author | Aditi Raval | Tuesday, Aug 19,2014 9:02 AM

Legacy countries & businesses are uncomfortable with change: Sir Martin Sorrell

India’s most celebrated TV journalist and anchorman Arnab Goswami, Editor-in-Chief, Times Now took on the mantle to indulge in a conversation with media industry’s most renowned influencer Sir Martin Sorrell, CEO, WPP.

Anarchy or positive disruption?

The session commenced with the two exchanging views on the current political environment.  Sir Martin said that the change in the Indian political landscape was an outcome of the political swing after 10 years of staleness in leadership that the electorate seemed to be tired of. When the news anchor asked him about anarchy and how it affects media, Sir Martin pointed out that it could also be called disintermediation -  development of new technologies that change the way the media is consumed.

There are two major discontinuities in the way people consume media and the way clients invest in it, he explained. The first is in traditional newspapers and magazines, where clients invest as much as 20 per cent, while consumers spend only six per cent of their time on it. On the other hand, consumers spend around 45 per cent of their time on the internet or mobile, but client investment amounts to only 25 per cent. Television gets 45 per cent client investment and only 38 per cent consumer’s time in the US. This discontinuity indicates anarchy or disruption in traditional free-to-air media. Sir Martin referred to the year 2000, when India was a fast growing market and the internet didn’t hold any significance.

Goswami interjected by asking if anarchy was a negative term according to Sir Martin and cited the example of Arvind Kejriwal who tried to cause anarchy but was rejected by people. Sir Martin said India was on the wrong side of the history up until the mid-90s. Western media, especially in the US, is uncomfortable about China’s rise. US has been on the right side of history for the last 200 years, he said. But anarchy and disruption are fundamental changes. “I am a believer in long-term, significant change,” said Sir Martin, adding that this is a major force which is rebalancing the world.

Remarking that India should take advantage of the shift in global perspectives since we have the demography, the geography and the technology to do so, Goswami asked Sir Martin, “Is India at the vortex of this anarchy in the global context?”

Speaking briefly on the change in political leadership, that he said was likely to encourage  economic growth, Sir Martin said, “When you are a legacy country or a legacy business, your attitude to change is an uncomfortable one, because that change attacks the legacy business model, which is why companies wax and wane.”

Making a strong case for India's growth, as compared to the US or western Europe, Sir Martin remarked how this country, like China and Brazil, has leapfrogged through the many stages of technological evolution.

Intuition Vs Data

While underlining that he was a firm believer of media flourishing in a free, democratic environment Goswami said that he did not agree with Sir Martin's view that anarchic change is 'data-driven'. This, Sir Martin said, was a ‘rash approximation.’ He said that historically media has been populated by creative people. “But the India that you want should play a more critical role in media is more scientific and data-driven,” he added.

Sir Martin said that qualitative and quantitative are both equally important and significant. Goswami asked ,“Is it more important to influence the market as a content person or to analyse the market as a data person?” Sir Martin said emphatically that both are important.

Continuing the debate over data and intuition, Goswami asked his guest how did he analyse content: “Is content King and intuition God?” Sir Martin said that world’s leading thinkers are of the opinion that management is leaning more towards quantitative thinking. But that had to be balanced. “Our clients are becoming too focused on numbers and getting somewhere they need to go by cutting costs. But for fundamental change, there has to be more qualitative thinking,” he said. There is a role both for the artist and the scientist, he explained.

He said that even David Ogilvy’s roots were in market research. He too predicted that research and data are really important. “You have your data and you have your intuitive questions. The mistakes occur when you go too far down on either route,” Sir Martin observed.

Fear of losing control   

Goswami was of the opinion that Indians fear fragmentation. “We like to talk about disruption but we also fear it. Somewhere it’s all about control,” he said. He also gave the example of Julian Assange who had once mentioned to him that in a democracy people like to control things, and Wikileaks was a force they couldn’t control.

Sir Martin said fragmentation is good for business; the power has shifted to the consumer. Hence a certain amount of fear of fragmentation has engulfed media as well as clients. Technology has opened up multiple avenues of inquiry. 

“I am a natural disruptor,” quipped Sir Martin. “We made a hostile acquisition of a company 13 times our size. The way my mind works is to be continuously concerned about disruption and change, to be continuously paranoid. Today those changes are coming at you faster than before.” He also cited the example of 3D printing that could affect manufacturing business. “It is at one level fascinating, but also scary for a legacy business,” he remarked.

Sir Martin said the need of the hour was to take traditional businesses and digitise them, make the existing digital grow faster and also continue to experiment.

He said that Google’s fear is not Facebook, Twitter or Snapchat, it’s two people working somewhere in a garage who’ll start something new. This, he said, goes for WPP too.

Sir Martin said internal threats for WPP would be fear of the unknown,  that is when somebody comes up with something unheard of or revolutionary. “Biggest internal threats also would be complacency, arrogance, lack of energy, self-satisfaction. The answer is continuous reinvention and thinking about what are the big shifts taking place,” said Sir Martin.

 TAM to go?

When Goswami asked Sir Martin’s opinion on TAM, he simply said, “It’s a wonderful company.”

He continued to prod, saying how in a country of 1.3 billion people, a few thousand meters don’t add up, given it’s a profitable company. Pointing out that he had waited for 15 years to ask this question, Goswami said: “Do you have to wait for the government policies to change or expand?”   

Sir Martin said it was unfair to say that. “TAM is reasonably profitable, not substantially so. If more meters are needed, the industry will have to pay for those. If you look around the world, we have a system that advertisers, agencies and broadcasters agree to on an equal basis,” he said, adding, “In the US, we were the first organisation to recommend, C+7 system which includes audience measured even two days after the transmission. The court has heard our appeal, judgement is in process of stay. As far as TAM is concerned, this is an unfair question on meters as the market decided on it. If 20,000 meters are needed, then fine, we will put them in order to get accurate audience measurement.”

Sir Martin pointed out that the decision to increase the number of meters had already been taken. “Putting India aside, there are many factors at work in any country -  commercial, media or political interests. Every media owner would like their ratings to be the strongest possible, when they change, they get upset, it is understandable.”

When asked if both TAM and BARC, or a third measurement system co-exist, Sir Martin said, “The market will decide.”

On a closing note, Sir Martin said if he had to do anything different if he was 30 or 35 again, he would bet on digital content, the vanguard or the entry point into multi-dimensional relationships.

This conversation took place at IAA Conversations in Mumbai.

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