Sir Martin Sorrell's 10 industry defining trends
Predicting that 2014 would be better than 2013 that is expected to be a tough year, the CEO of WPP points out 10 areas of focus for the industry
In his recent visit to India, Sir Martin Sorrell, CEO, WPP met up with industry leaders and key WPP clients to understand and elaborate on factors that impact and define the marketing, advertising and media industry.
For some time now, WPP has followed a well-defined four-legged strategy for its own growth. The first two aspects include focus on new markets such as India and China that are already a third of WPP’s $17 billion business revenue and the second is the focus on new media, which too is contributing a third to WPP’s overall revenue. Application of data and technology is another area that is part of WPP’s growth strategy and the fourth is ‘horizontality’ across its businesses, implying seamless working across the organisation in order to leverage the combined might of WPP where relevant.
In the rapidly evolving industry, Sorrell lists out 10 trends that influence and shape the future of the business.
Globalisation: The growth of companies not only towards the East and BRIC markets but also to markets such as Latin America is being observed amongst various multi-national companies to tap of markets of the future
Talent: It is imperative for the industry to invest in people and create human assets for its future. At present, the industry follows what Sorrell defined as a ‘stealing’ format, where most of the hiring is poaching from other agencies. Sorrell cited the example of an initiative WPP has taken in China, which is already its third biggest market, on this front.
Web: The role that the internet is playing in information and content dissemination has already made tremendous difference to those who understand its nuances. Today different companies are employing different business models to make businesses focussed on the web domain deliver for them and it has become an attractive destination.
Rise of the Retailers: Sorrell pointed out that in the changing economy, retailers become powerful every day. The growth of Walmart, Tesco, Carrefour and their ability to become platforms to connect with and engage consumers is only going to further fuel the growth for the domain. Now that India too has seen an increase in FDI for retail, the power that this sector sees globally, will become more visible in India too.
Internal Communication: “One of the biggest issues we see is the CEO being able to explain strategic changes internally, especially when there are multiple brands in a company,” said Sorrell as he explained that companies are investing in making their internal communication more effective, especially in a world that sees growth through mergers and acquisitions and hence the combining of different cultures.
Disproportionate power to Finance: Sorrell stated that finance, and more specifically procurement, was finding more importance in most clients companies that WPP dealt with. “It is understandable at one level, but clients are worrying more about pricing now and that has implications on costs,” said Sorrell. Agencies have to invest in a client’s business (by way of people employed on the account and application of data and technology) and clients need to understand that.
Consolidation: To make more sense of the economics of the business, more consolidation is on the horizon and it would take place across stakeholders including clients, media and agencies.
Global and local emphasis: “We see more global emphasis and more local emphasis, and in the process, regions are squeezed in between,” said Sorrell, reiterating the need for a company to be able to think global and focus on local at the same time.
Government here to stay: One of categories that is growing the most in advertising spends is government, informed Sorrell adding that government as an investor, regulator and client will become even more important in days to come.
CSR: ‘Doing good’ is now understood to be good for business. What was once an isolated, backroom function is now frontend. No Chairman and CEO would distance themselves from the company’s CSR activities realising that there are many shareholders to a business today.
Sorrell summarised to say that the year 2013 would continue to be a relatively tough year but 2014 that would see some big spend properties including General Elections in India should be a better year.
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