The Drum caught up with WPP CEO Sir Martin Sorrell at the Cannes Lions Festival of Creativity to talk about disruption to existing advertising models and why the game has changed for agencies.
Agency networks are changing, and if there is one man who is witnessing the changes within the marketing agency business, it's Sir Martin Sorrell. He joins The Drum in the penthouse suite at Ogilvy & Mather's sun drenched four storey building, where he is once again attending Cannes Lions. He enters casually, wearing a Brazillian shirt signed by Pelé and clearly in good spirits, ready to offer his insights on how his business is being disrupted by the ever developing world of technology. Clients are where he is seeing the first change, with agencies no longer solely speaking to chief marketing officers, but also to chief financial officers, chief procurement officers, chief information officers and chief technology officers, who are entering – and in many respects, leading – conversations. “The nature of the client is changing and there is a lot of debate over who is going to control the budget. There won't be an answer to that other than determined by the power bases of the personalities and the individuals but there might be somebody who brings them all together,” he explains, adding that agencies are having to introduce changing capabilities as a result.
"We have seen agencies which have been very strong creatively in a traditional sense, making TV commercials, stumbling in the dark, trying to alter what they do given the rise of technology. Those agencies that were dominant 10 years ago are having great difficulty now because clients yawn when they get a 30-second TV ad, however beautifully produced or however stunning it is. The game has changed. "If you are running a traditional agency, you have to change the nature of the people, you have to broaden the nature of the creativity and then the link to the media industry – there is a debate over whether the message is more important than the medium or the medium over the message. Largely, that becomes less important if they are working closely.” The rise in digital technology is also changing the people work in agency environments, which means that different types of thinking is needed within strategic, planning, account management and creative and execution elements of a business. “You need to have programmers, engineers, scientists and mathematicians, and it needs different type of agency people working together," he says. "Not like somebody starting an agency and saying they will do things in a seamless way, but doing it through the teams that are there together. We're trying to leverage our capabilities to deliver the best people working on the business.”According to Sir Martin, retention of the best people causes issues for all parties, as clients always want to work with the best, however those clients also rotate in their roles. “We provide the continuity which is not bad as it locks us in, but from our people's view, they want variety. This is why I don't think programmatic buying in one client will be successful because I don't think that good people will want to work in something like an in-house agency. They want variety. Our people want different challenges. The team concept is difficult in that sense because it is one-client driven. Retaining the freshness is not easy, but the war for talent is tough now and it's going to get tougher.”The advertising industry in the past 10 years has also meant a rise in what Sorrell has previously described as ‘frenemies’, with the likes of Twitter, Facebook and Google entering the marketing services sector to offer solutions and hire talent while working with many of the networks at the same time. “These are not tech companies,” he states adamantly of Facebook and Google. “They are media companies masquerading as tech companies.”
Sorrell warns the companies in question to be more careful, having begun to take top people from companies such as Procter and Gamble, Unilever, L’Oreal, GSK and other major brand organisations as well as out of agency networks. He refers directly to Google's hiring of senior P&G executive Kirk Perry to head up its brand advertising initiatives last year as an example of one such manoeuvre. “There is the potential to build very powerful relationships as long as we deal with one another in a very transparent way. All I can say in relation to Google is that I have wonderful conversations with them but when I visit them, my colleagues think I need my head examined because their sales force has been all over our clients.” He acknowledges that threats emerge all of the time, and that “every company operates with frenemies,” citing Sony working with Samsung as an example. “Deloitte, our auditors, are frenemies. They are building and we compete on acquisitions – so here is someone we pay £30m a year who is competing with us.”Further changes are also taking place within the media buying space, with programmatic buying the fastest rising sector in advertising at the moment. Sorrell says that he firmly believes that much of the future of advertising will revolve around automation, justifying the money spent on his own company's investment in Xaxis, the world's largest programmatic agency. However, he adds: “There is still the human element [to advertising] but I still believe it will go that way." Sorrell concludes his overview of the changes he is witnessing by reiterating his prediction, made to The Drum on the same day that the Publicis Omnicom merger fell through,
that Havas would be consumed by parent media company Vivendi and that Interpublic Group would be acquired by Dentsu, but continues to hold firm on his own strategy of hiring small to medium sized firms working in digital or emerging markets. The agency world is most certainly evolving around technological change, and come a few years from now, it might well be unrecognisable to what we see today, should Sorrell’s views prove correct.