Sir Martin Sorrell is arguably one of the most influential men in the communications industry. He is the CEO of WPP, the conglomerate he began creating in the 1980s using a wire and plastic products unit as the launch pad for a series of audacious takeovers. Today, WPP has a media portfolio of $72 billion, or Rs 3.24 trillion (1 trillion= 100,000 crore), and is a powerhouse not only in the media and creative businesses, but also in data analytics and new media. In India recently on a business visit, he spoke to BT's Anumeha Chaturvedi and Somnath Dasgupta on new media, commoditisation of the business and pay walls, and much more. Edited excerpts:
On what differentiates WPP from rivals: Our strategy differentiates us… In India we have a very big market share, in China we have about 15 per cent, in Brazil we have 25 per cent, in Russia we have 25 per cent. So I think the first thing (differentiator) is new markets, the second is new media. As with new markets, it is about 30 per cent of our revenues. Our revenues last year were about $15 billion (Rs 67,500 crore)…. In both cases, our businesses are twice as big as the competition. And the third area is consumer insight, which is about 25 per cent of our business. We are very big in market research business in India. So actually India as a point of differentiation is affected by all three - new markets, new media and consumer insight.
Whereas the traditional agencies or the traditional approach would be to focus on planning, creative execution and distribution, we are focused on the application of technology as a fourth area, and data analytics as a fifth. Nobody has a consumer insight business.
Do media and creative departments work better in silos? Well the cat's out of the bag. If you were a media person, or indeed a creative person, why would you agree, having separated these things, to put them together? The issue would be who reports to whom, or who originates the ideas.... I do think coordination is important, but I also think the medium is becoming more important than the message. Therefore, media people, probably rightly, stress their importance and the problem in the old full-service agencies was that they used to put media in the back of the agency. Media people never got the nice cars, the nice offices or the incentives or the bonuses. So why would they, having gained their independence, want to go back? The creative part of the agency - so-called creative, because everyone is creative - would like to see it. They made a mistake, they lost control. But they lost control because they never gave the media side enough importance. So I think it's unrealistic to expect a fusion. If clients do want fusion, you can achieve the same organisationally by putting the two together.
On why the advertising industry does not recruit heavily from B-school campuses: We have. We have been very aggressive, particularly with our fellowship programme, which is unique... The problem with our industry is that the philosophy or the ground rule is if you win a piece of business and you need people, you nick them, you steal them from the competition. That, in the long run, can never be a solution... The reason why McKinsey is such a strong company or Goldman is such a strong company is that they recruit the best people at universities and schools. There was an exchange between Michael Roth (Chairman and CEO of Interpublic, a rival group) and me at a session in Austin (Texas). He made some comments about how he had put his strategy officer in charge of talent.... The person he was referring to was doing strategy and talent. The person reporting to the talent officer.... all he does is go around and try and recruit people at escalating salary and incentive packages in order to nick them. It's outrageous!
Rivals say WPP commoditised the business... Well, of course they would say that! They would be upset because they didn't think of it first!
Ah, so WPP did commoditise?No, no, no! No I didn't say that! I said they would say that because we thought of it first… we thought of actually consolidating the media. Of course, they would say that because they are jealous of our position. I do not blame them. I think that is a good indication that what we are doing is right. Not commoditising it, you know, because if you look at the media side, there is media buying, media planning. You can't commoditise it. It gives you that opportunity to leverage that position on behalf of your clients to get better content across platforms, ... I mean, how would you explain, if it was such a bad idea, why everybody is trying to follow us? Haven't got particularly far, but they are trying!
Is the mobile going to be the new Internet in India? I do think it will… There are three mobile providers (each) with over a 100 million (subscribers) here... Theoretically, you would leapfrog the PC, and you would have a new model, here in India, or China or Brazil or Russia, where smartphones will be the cheap form of access to the Internet.... But we haven't seen much of that allocated or diverted from budgets.
You know we have 40 per cent of the largest mobile agency icon (iconmobile GmbH, a mobile marketing network)... That has tremendous volume, but its profitability is limited, to put it mildly.... I think it is still in its infancy. The other problem is that, historically, the network operators, would never cooperate. When Google and Apple started to develop their own operating systems, that put a lot of pressure on the networks to get their act together. We still haven't reached tipping point yet. (But) it is going to be very important.
Ultimately, people are right when they say you can't differentiate between the two... When I listen to radio on this (gestures at his iPad), which I can do, is that radio or is that new media?
Are media agencies better than creative agencies at digital? I don't think you should say that. I think it would be very unfair to say that one is better than the other.… everyone is creative, even financial people, sometimes they can be too creative. You could say you got the old agencies, the traditional agencies, you've got the digital agencies, and you've got the media agencies. And if you were to choose between the three of them, you would have to say that somebody who focuses on one thing, digital, would probably have a stronger call there.
On pay walls and the way forward: Three things have to happen.... You have to have consumers paying for content that they value. If they think you know what you are talking about, and you write good stuff, they should pay for it. It is the ultimate economic measurement... Two, you are going to get more consolidation, because there are too many media owners. And the third thing, which is probably much more controversial, is that you would probably need state subsidy. The way the BBC has state subsidy. I think those are three things that have to happen for the traditional market to establish equilibrium.
On mining data from TV set-top boxes: There are issues of privacy… getting consumers to opt in or opt out - we prefer the opt out route - this is critically important. On set-top boxes, there are potentially very useful ways…. You would know who you are talking to, and therefore it is likely to be much more effective… But all that raises big issues of confidentiality and privacy. What you have to do is you have to work out a system with the regulators... about how you control that.
Full transcript of the interview at www.businesstoday.in/sorrell