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From BRICS to business trends, Sir Martin Sorrell decodes all at e4m Conclave 2015

From BRICS to business trends, Sir Martin Sorrell decodes all at e4m Conclave 2015

Author | exchange4media News Service | Friday, Oct 09,2015 8:09 AM

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From BRICS to business trends, Sir Martin Sorrell decodes all at e4m Conclave 2015

Sir Martin Sorrell, CEO of WPP, was the keynote speaker at the 15th exchange4media Conclave held in Mumbai yesterday. One of the best known names in the media and advertising industry, he gave his thoughts on a variety of topics; from the need for transparency, to why he is so optimistic about India's economic future.

Speaking of WPP's strategy, he laid stress on India, "the only brick in the wall", a subtle reference to the ongoing problems in other BRIC nations. "India will be the shining light and I think the prime minister understands the challenges and opportunities and is approaching them in a strong and effective manner," he said.

He informed that WPP sees 31 per cent of its business coming from fast growth markets, something he wants to see increase to 40-45 per cent over the course of the next 5 years.

Speaking about the current problems being faced by India and other BRIC nations, Sir Martin said, "It is natural that we will have fluctuations. Nothing in life goes up in a straight line but there is a secular trend that favours the BRICS nations which is why we have tied the future of WPP to these countries."

Moving to the areas where WPP is seeing growth, he said that digital will contribute more than 37 per cent of business by the end of the year and this is expected to go up to 40-46 per cent in the next 5 years. "Of our revenues of $19 billion, media is $5 billion, data is $5 billion and digital is $6 billion. So of $19 billion revenues, $16 billion are in areas that Don Draper would never recommend," he quipped.

The definition of creativity has shifted he said. It is no longer compliant to the creative department of the ad agency. He opined that the industry tends to be narrow in what constitutes creativity but creativity can be expressed by people in any discipline. His next point was on horizontality in the organization, basically, that every employee should be prepared to work across verticals. "The clients want the best people to work on their projects. They are not interested in our verticals," he said.

The world is changing, he said, with regions like Latin America, Brazil, Africa, Asia coming up. "Countries like China, Russia, India, Brazil, etc. are disruptors. They disrupt the natural order and the natural order does not like it. It feels threatened. The balance is changing. People say that China's slowdown is an opportunity for India. This is not so. The better China does, the better India will do, the better the US and the UK will do. It is good for all of us. This is not a zero sum game," he stated.

He further said that Indian population demographics (a large proportion of youth) gives it a big advantage whereas in the case of China this is not so.

The next point he spoke about is that demand is less than production while there is not enough talent to satisfy demand. To highlight the first point he gave the example of the US auto industry post the 2011 financial crisis where auto production dropped sharply in the US but global numbers were made up for by increase in production in China, even though, the global demand did not increase.

"Differentiation in tangible and intangible ways is more important right now. Companies will even more get differentiated in terms of talent," he opined.

He also spoke about companies like Google, AOL, Yahoo, Twitter and Facebook; companies he calls disruptors. He called these companies media companies masquerading as technology companies. "They are in the business of selling media inventory," he said. he queried whether any company would give Rupert Murdoch their media plan and then coming back to companies like Twitter and Facebook, he called it a case of players referring the match.

His point was that even though these companies are selling ad inventory, most organizations are okay with sharing data with them. Speaking about his investment in ComScore, he said the investment was made as they felt Nielsen metrics did not work in the US. "The hurdles of measuring online are too low and the hurdles to measuring offline are too high. A 3 second view is not a view. If you are watching a video and the audio turned off, it is not a view. The standard we apply for online media are out of sync with the standards we apply for offline media," he said. According to him, this is causing clients to question whether they should take a closer look at digital media. "I think the pendulum is shifting back a bit towards traditional media," he opined.

He referred to one slide from Mary Meeker's Internet Trend Report 2015, which stated the amount of ad money spent on each medium as opposed to the time spent on each medium.

He pointed out that according to the study, mobile accounted for just 8 per cent investment though time spent on it had increased and was now at 24 per cent. Comparing this with other media, he stated that traditional media like print and radio as well as internet were more or less equitable in terms of time spent and investment while TV had actually seen a reduction in time spent and ad spends. "Clearly, what is happening is that there is a change," he said. He then referred to a Canadian study though he said that the trend is more or less the same across countries. This report spoke about the quality of engagement with each medium with print scoring the highest. "The quality of engagement is higher on traditional but we have seen through our partnership with Twitter that in live TV events, people are more liable to tweet to each other than talk with each other. This shows that the engagement is much more than what the data shows you," he stated.

He then spoke about the relationship between retail, manufacturing and e-commerce. According to him, with the growth of proximity retail stores and e-commerce, the manufacturers now have an upper hand over their retail counterparts. He compared this to the beginning of the concept of advertising which was started as a way to get the product directly to the consumer without going through the middle man or the retailer. The only thing of concern to the manufacturer could be, he opined, that the e-retailer would control the ground and, hence, the rules.

Geographically, he felt that the "regional" vertical is getting squeezed as local and global areas are getting more important. "Companies need to depend more and more on local, geographically. By the time, I feel India and China should be taken out of Asia and be considered as a separate region. You cannot treat these two countries with countries like Singapore (due to population disparity)," he said.

If you ask me what is the one thing that worries me most about our industry it is the unwillingness of clients to invest in long term," said Sir Martin. He admitted that it was a complex issue with a lot of different facets. A lot of things are driving an emphasis on cost, he said. "Ironically, the companies likely to win are those who have unconventional or unexpected corporate structures to what corporate governance expects," he said. he gave the example of the Murdoch family and Mark Zuckerberg and Facebook as examples stating that with the high rate of attrition being seen in the industry, most executives think short-term but with power concentrated in one or a few people, a more long-term view can be taken by the company.

He also stressed that it is important to sustain the environment by developing and nurturing talent. he also took the example of the current scandals involving FIFA and how brands should react to it. According to him, a brand needs to do something if there is a possibility of corruption. "To sum up, if you want to be in business for a long term, doing good is good business," he said.

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