strategy+business ISSUE 84 AUTUMN 2016 Thought Leader Interview: Sir Martin Sorrell WPP’s CEO explains how the global agency is deploying its resources to connect effectively with clients and consumers across industry and geographic borders. BY DEBORAH BOTHUN AND DANIEL GROSS REPRINT 16315 THOUGHT LEADER Thought Leader Interview: Sir Martin Sorrell WPP’s CEO explains how the global agency is deploying its resources to connect effectively with clients and consumers across industry and geographic borders. BY DEBORAH BOTHUN AND DANIEL GROSS (US$67.5 billion) and revenue of £12.2 billion ($17.4 billion). The company employs 190,000 people spread across 3,000 offices in 112 countries. As was said of the old British Empire, the sun never sets on WPP. Its operations touch every part of the global media industry, and, increasingly, other industries as well: technology, software, retail. And, unlike many others in the media business, WPP has managed to post steady growth in profits. Its earnings per share were up more than 10 percent in 2015. The consistent growth and so- lidity of this company belie the churning waters in which it operates. The term disruption has been so ir Martin Sorrell is one of MediaCom, Mindshare, and MEC; overused as to have almost become a thought leader the most enduring leaders its data management arm Kantar cliché. But it is difficult to think of S in an industry that is (which includes Millward Brown industries that are being disrupted famously transitory and focused and TNS); digital firms Wunder- more than advertising, marketing, on the shrinking human attention man, VML, Possible, and AKQA; branding, and communications, the span: advertising and public relations titans sandboxes in which WPP plays. marketing services. As Burston-Marstellar and Consider the ability of DVRs and CEO of WPP, he pre- H+K Strategies; and other technologies to block and sides over a parent com- public affairs outfits such screen ads; the growth of time shift- pany stocked with more than 160 as the Glover Park Group and Penn ing; the introduction of new mea- operating companies. WPP’s assets Schoen Berland — not to mention surement tools; and the headlong include iconic advertising agencies many other wholly owned operating rush of consumers to access media such as J. Walter Thompson, Ogilvy businesses, associates, and invest- on tiny mobile screens (and then & Mather, Grey, and Young & ments. WPP is a global empire with make purchases there). Native con- 1 Rubicam; media agencies such as 2015 billings of £47.6 billion tent — a phrase unheard of five years Photograph by Phil Adams ago — has become de rigueur. Sand markets are not as fast as they used SORRELL: There’s a limit, though. I Hill Road in Palo Alto, ground zero to be. find it very difficult to believe that of the venture-backed technology clients can do in-house program- revolution, is now rivaling Madison BOTHUN: Will you still be an matic advertising, for example, over Avenue as the geographic center of advertising agency? Because you the long term. When they’ve got low the advertising industry. As publish- recently said WPP isn’t in the growth, very little pricing power, ers give way to platforms, technology advertising business. low inflation, and a focus on costs, I companies move into the ad busi- SORRELL: Already, half our busi- can’t see clients spending a lot of ness, clients develop their own con- ness is media and data. And we’ll be time or money building their in- tent, and audience attention grows a more digital business and a more house programmatic advertising ca- more elusive, advertising companies data-driven business. But I don’t see pabilities. And most of the good must develop ways to work, invest, and think collaboratively. Sorrell sits at the center of this “Three-quarters of our business maelstrom. An air of calm pervades WPP’s headquarters, in a town- comes from stuff that Don Draper house in the Mayfair area of Lon- wouldn’t have recognized.” don, whose reception area more closely resembles an economics de- partment at a university than a any massive changes in direction people in that area don’t want to glitzy 21st-century multinational. from where we’ve been going for the work on just one client, they want to (A shelf displays the many Cannes last five, 10, or 15 years. Digital will work on a multiplicity of clients. Lions awards the company has won be 40 to 45 percent; that’s inevitable. You also have to keep up with the in recent years.) In an unadorned Data will probably be the same, technology. conference room, Sorrell sat down maybe a bit greater. But the big en- We buy $73 billion in media a with Deborah Bothun and Daniel gine of WPP is the $73 billion of year, and the largest single client we Gross and discussed the necessity of media that we buy each year. Our have does $6.5 billion. So we’re coming together more effectively. billings are bigger than Google’s. If about 11 times bigger than our larg- you add it up, especially the data est client. And we can get the bene- thought leader BOTHUN: At the PwC Global and the media, three-quarters of our fits of economies of scale. Now, it’s Entertainment and Media Outlook, business comes from stuff that Don true that our digital billings are only, we try to look ahead to see what Draper wouldn’t have recognized say, about $23 billion out of the the media industry revenue trends 30 years ago. We probably wouldn’t $73 billion. But we can get very, will look like over a five-year period, have recognized it ourselves 15 years very great economies of scale, par- which is difficult. What will your ago. It’s always very difficult to fig- ticularly in the highly fragmented business look like in five years? ure out what will happen going for- online space. SORRELL: In a sense there’s violent ward because the nature of our com- change, and in a sense there isn’t. petition is changing. BOTHUN: Let’s talk about segments. The direction remains the same. There’s a big focus on reaching We’ll be a more integrated business. BOTHUN: You’ve got your clients youth today. We’ll be a more fast-growth-market flirting with trying to do some of SORRELL: It’s a bit troubling as to business, although those fast-growth their own work, with native content. why, given the fact that the older seg- 2 Deborah Bothun Daniel Gross [email protected] gross_daniel@ leads PwC’s global strategy-business.com entertainment and media is executive editor practice. She is a principal of strategy+business. with PwC US based in New York. ments are growing faster and they’re at the behavior of the centennials Ogilvy’s big idea or Stanley Reese’s wealthy. But that’s a subject that’s (people born in 1997 or later) or the big idea or Ray Rubicam’s big idea been with us for 20 or 30 years. millennials. So, Snapchat versus doesn’t matter. But what it means Facebook. We do the analysis on is the other aspects have become BOTHUN: In the 54 countries them and the older demographics, very much more important. It’s not where the Global Entertainment and then we come up with an idea. just the 30-second, 60-second TV and Media Outlook measures It could be a single big idea or one spot. So we need a creative who is media, there is a pretty direct that is segmented by media. And prepared to employ data, to use correlation between growth in in a way, the medium has become technology. entertainment and media spending more important than the message, and the proportion of the popula- in the sense that the nature of the GROSS: What type of stresses and tion under 35. medium determines what the mes- pressures does that put on an SORRELL: A direct correlation? I sage is. We may do one thing for organization and on senior execu- think that’s understandable. I think a small screen like this [points to tives who are not data scientists? younger people are more interested his iPhone], and, for a big screen SORRELL: It means the skills need- in music and entertainment and so like that [pointing to a colleague’s ed are very different from the ones on. But these are very fragmented tablet], we may have to do some- Don Draper had. There are also audiences. thing different creatively or contex- skills that you probably still need to- tually. So when I’m playing a video day. People in our business get very BOTHUN: So if you were giving game, instead of seeing an ad that irritated when I say this, but it’s a bit thought leader advice to a 22-year-old who wants is completely irrelevant to me, I see like King Canute and the waves, to be in the advertising, media, an offer for the latest edition of isn’t it? You can’t stop the tides. Peo- and marketing business, what the Ford F-150 because they know ple are looking back with rose-tinted would you tell her to do? Get a I’ve recently done a search for pick- spectacles to a different era. degree in data analytics? Become up trucks. But to your question, you have an IT specialist? Creative is still obviously very to change the engines while the SORRELL: The answer to that ques- important.