People take notice when WPP chief executive Sir Martin Sorrell says advertising is a "totally wrong description" of what his company does today. The head of the world's largest advertising and marketing conglomerate tells IAB MIXX attendees that "advertising is a reversion to when I came into the business almost 40 years ago" because it suggests legacy media and art instead of science.
"As the world consolidates, it's increasingly important to think about our business in a broader way, Sorrell says. "In essence, we're getting locked in much more and our business is changing. It's not an art anymore, it is a science. And it's much more than just advertising."
WPP is currently focused on new markets, new media, data investment and management and what Sorrell calls, horizontality, or getting all of his employees and vested parties to work together.
"Our role is to try and help clients figure out what they should spend and where they should spend it. And the more complicated it becomes, the more important we become," Sorrell says.
Data, which is a major growth platform for WPP, serves to connect those dots and improve the effectiveness and reach of every campaign. "We have a real data business as opposed to some mythical businesses you find on Madison Avenue," Sorrell continues.
The proof, he notes, is in how WPP and its agencies now regularly collaborate and answer to its client's chief executives, chief marketing officers, chief financial officers, chief information officers and chief technology officers. Companies in the ad space are invoking big data far too often, and mostly to justify their latest deals or partnerships.
"Big data to me, it's over-intellectualized," he adds. "Big data is about harnessing all the sources of data that we have."
Without the traditional leveling effect that price inflation can drive at the point of purchase, inflation is hitting elsewhere in commodities and pushing many company's profit margins down as a result, Sorrell explains. "This has put tremendous pressure on us as part of that supply chain," he says.
These recent economic realities are primarily responsible for the industry consolidation of late, and it will continue to increase at the client and media ownership levels, Sorrell adds. The industry's seven giant holding companies have narrowed down to five, and "of the five you could say it's really become three that compete against each other," he says, dismissing Densu and Havas and lesser competitors.
Moreover, he points to many indications that a duopoly is forming in the industry between WPP and the yet-to-be merged Publicis Groupe and Omnicom. As those two firms make the case for regulatory approval, Sorrell says the claimed benefits of scale and an organized competitive threat to new media are nothing more than "obfuscation."
"The only place in our industry where there are scale benefits are in media buying... and it's mainly in legacy," he says. "There are not scale benefits in the area of creative." As such, he expects traditional media to be the greatest regulatory threat to Publicis Omnicom Group's merger.
Finally, Sorrell concluded his morning keynote by pressing Randall Rothenberg, the interviewer and chief executive of IAB, to ask him what's next. Dismissing mobile and data as the "typical nonsense that people throw out," he believes China and Chinese business models are on the cusp of tremendous growth and influence. "We in the West think we have a monopoly on this wisdom," he says. "We don't."
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Matt Kapko has been writing about mobile since 2006, before it became cool. Based in Long Beach, CA, he has covered mobile entertainment, digital media, marketing, and advertising for several business media outlets. A former editor and reporter for RCR Wireless News, paidContent, and iMedia Connection, Matt is a regular freelance reporter for ClickZ. You can follow Matt on Twitter at @MattKapko or drop him a line at email@example.com.
March 19, 2014