Sir Martin Sorrell: Clients can’t treat agencies as banks or insurers
Sir Martin Sorrell has expressed his concern over clients treating agencies as “banks or insurers” as he commented on the ongoing spate of media reviews.
Over the past few months, the likes of Coca-Cola, Unilever, L'Oreal and Johnson & Johnson have all put their massive media billings up for grabs, causing what Sorrell describes as an “enormous strain” on WPP – the incumbent on several accounts – as it effectively tries “to run two trains on time”.
“[Are the reviews] because of transparency, a rebate issue in a non-rebate market, because of a lack of trust, media fragmentation, or because media is the biggest line item in PNLs? Probably an amalgam of all these things but whatever the reason, it’s put an enormous strain [on us],” he said.
Underlying his concerns is the amount of uncertainly and reluctancy there is from clients to invest, which has led to selecting agencies based on price and treating them as either the “bank or insurer”.
“I don’t think payment terms should be acritical determinant. We are about differentiation; you can’t choose on the basis of payment terms. Or the completely insane thing is that we should be held responsible for indirect breach of intellectual property. And then become an insurance company. Is this going to change? The sad conclusion is that it’s not.”
For Sorrell, differention then comes from data and digital. The latter commands greater marketing budgets – it currently makes up over 40 per cent of WPP’s revenues – and as such clients’ procurement teams have taken greater interest in how effective their spend is. The is demanding more precise digital measurement.
Earlier this month, the WPP boss was vocal on the “ludicrous” practices of Facebook, describing it as a media owner masquerading as a tech company and that clients were mistakenly trusting is as both the “player and the referee” as they validate their media plans.
For its part, WPP has invested heavily in measurement firms ComSore and Rentrak in recent months. Of their merger – announced yesterday – Sorrell said he was pleased.
“A full alliance that was announced last night was great,” he said. “Rentrak and ComScore [coming together] wasn’t easy. But the industry was crying out for it.”
He said the opportunity for third party refereeing is now going to be enhanced by ComScore Rentrak alliance. WPP will have a have a 16 per cent stake in the combined entity, with an option to increase its stake to 20 per cent.