‘Adapt or die’ – Martin Sorrell’s message to ‘Pavlovian’ ad industry holding companies
Outdated advertising industry holding companies are now at the point where they must “adapt or die” due to pressure on marketing budgets that started back in 2008 with the global financial crisis, and is now reaching a tipping point, S4 Capital executive chairman Sir Martin Sorrell has told Mumbrella.
Speaking on the sidelines of the Innovfest Unbound conference in Singapore, the former WPP chief executive insisted that the big ad networks were “locked into huge overheads” and were too “worried about being the incumbent agency” to be able to deliver for clients in an agile way.
“The Pavlovian action of any agency is to do a TV commercial,” he said. “Our concern at S4 Capital is to do the best job [for the client] even if it means we are disenfranchised. We have to optimise the distribution of [client] budgets,” he said.
“The model is shifting rapidly. Last week, we did 100 meetings at Cannes and in all of them the focus from clients was on the propensity to experiment. There has been pressure on marketing resources since 2008.”
Sorrell claimed that S4 Capital’s low overheads and a cheaper wage bill due to the average employee age being 25 at programmatic firm Mightyhive, and 33 at Media Monks, the production house, meant it could deliver greater bang for the buck than the networks.
“It’s adapt or die, the holding companies have big structures built in,” he said. “We negotiate fees in a totally different way. They are locked into huge overheads that are not fit for purpose. And agencies are worried about incumbency.
“For the big six, it’s very difficult and you can see that in their financial results. You saw them on the beach at Cannes last week and that lack of performance in the awards from WPP and Publicis.”
Earlier in the day, Sorrell spoke onstage to an audience of more than 1,000 delegates. While he criticised his former company WPP, and fellow network Publicis, for “complete failure” at Cannes, he also attacked Dentsu for taking an “ant-Gaijin stance”. The company recently restructured its management, with critics suggesting it was the Japanese headquarters taking greater control and ridding the agency of foreigners at the very top of the hierarchy.
He also claimed that the departure of Publicis chief creative officer Nick Law, a former Aussie adlander, to Apple and the exit of creatives Ricardo Casal and Juan Javier Peña Plaza from the WPP agency Miami David, showed that the networks were in real trouble – no longer being the most attractive place to work for the brightest talents.
“The days of tentpole campaigns are numbered,” added Sorrell. “It’s difficult for them [the networks] to move quickly, particularly if its a listed company, as it’s tough to take the long-term view.
“We recently produced a 1.7-second Facebook ad for L’Oréal in France because that’s the optimal viewing time on Facebook. Our people are half-nerd, they are not agency people.”
Sorrell started S4 Capital just a year ago and in that time has grown it – via acquisitions like Mightyhive and Media Monks – into a US$750m business with 1,400 staff in 18 markets. Among the clients are Procter & Gamble, Nestlé, Bayer, Google, Facebook, Amazon and Starbucks.
Asked why he felt the need to start again at the age of 73 after 33 years with WPP, he admitted to having a bad case of “founder’s disease”. He also acknowledged that “wanting to impress my father” had been a driving force throughout his career.
“Sorrell claimed that S4 Capital’s low overheads and a cheaper wage bill due to the average employee age being 25 at programmatic firm Mightyhive, and 33 at Media Monks, the production house, meant it could deliver greater bang for the buck than the networks.”
Hey all employees: you’re going to get canned when you get old (39).
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Easy for SMS to say but he’s quick to forget that if he hadn’t been asked to step down from WPP he’d still be leading them and I doubt very much would have been able to deliver the change required. That said, hats off to the Accountant Ad Man for this latest venture.
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Sorrell is merely doing now, what he did for 30 years at WPP – acquire companies. He’s just acquiring a different type of company and making bold statements about how they’ll be integrated together in order to leverage the best of what each agency has to offer, which in his mind, will deliver the ultimate super-agency that is ultra-forward thinking.
Good luck to him but Dentsu has been doing this for years and its not really working out for them.
Its laughable that he is spending so many hours berating holding companies, when he is currently creating one.
Maybe I’ve read it wrong but he just looks like a dinosaur in a new t shirt.
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‘Adapt or die’
Hopefully die!!!
Advertising as we know it.
Over Promising
Trickery
Manipulation
etc
etc
Time for a more Honest and Authentic approach to Brand Communication.
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Dinosaur bites Pavlov’s Dog … now THAT is (not) news.
What’s next? A new wire and plastic basket that is better than the old one?
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Does basically feel like:
“I’ve moved somewhere new so now need to denounce my old place”
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I remember in the 90’s when he was the finance guy for the Saatchi’s. There was an article about them gobbling up companies. Someone posted it in the office after writing a speech bubble on it with ‘gobble, gobble’.
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