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Media partners Sir Martin Sorrell and Shane Smith on the dystopian future of consolidated media

Shane Smith Martin Sorrell

In a one-on-one interview on the Dmexco stage today (14 September) WPP chief executive Sir Martin Sorrell and Vice founder and chief executive Shane Smith exchanged views on a host of industry trends including: inadequacies in media measurement; how Snapchat is helping to “hedge” the dual hegemony of Facebook and Google in the digital space, as well as consolidation among media conglomerates in emerging markets.

‘Strategic’ media partnerships over acquisition

At Edinburgh TV Festival last month Smith addressed comments that Vice was doing deals with the devil, telling delegates when you run a company “you have certain decisions you have to make”. Instead of floating Vice on the stock exchange, with Smith bemoaning the idea of running a public company, or indeed agreeing to an acquisition, the chief executive has agreed a number of ‘strategic’ media partnerships to guide its global growth.

One such deal is with Sorrel’s own WPP, which has approximately an 8.4 per cent stake in the company. By comparison, Rupert Murdoch’s Fox owns a three per cent stake, while Disney has the biggest stake in the business at 18 per cent.

Today (14 September), he told Sorrell that it is “important to have strategic partners going forward”, and with WPP being the largest agency globally in the world, that puts Vice in good stead to grow its platform globally in the advertising and marketing world.

With plans to develop the company’s linear channel Viceland across 58 markets showcasing original content 24 hours a day, Smith said having Disney - the largest media company in the world - to help navigate those waters is very helpful. Meanwhile Fox has a large presence in India with Star, and the UK with Sky, both of which Vice is leveraging to launch the Viceland channel.

Sorrell expressed an interest in “working more with Vice”. He said: “We are always looking for ways of differentiating ourselves” and added that a “unique relationship with Vice” is in process now and will shortly be announced.

The consolidation of traditional media

Smith shared his previous prediction that the media landscape is ripe for further consolidation, claiming the top five companies will become the top three and maybe even two “if Viacom continues its dramatic implosion”, something that “has never happened before”.

"There is a lot of consolidation in digital media that is only going to get worse. In mainstream media this is going to increase plus disruption in the agency world. All this money is shifting because you have a calling of the bird in digital," Smith said.

Sorrell pushed Smith on where this consolidation is happening due to industry-wide concerns over bots, ad blocking and a lack of sharp measurement.

“There is a lack of correct measurement. Ad blocking is getting worse. Programmatic is putting a downward pressure on advertising, it is an auction in reverse, so that is hurting people," responded Smith.

“We have difference in opinion on this" he told Sorrell, "We say we have a premium and they buy around you. Who is getting that money in the scale plays? The scale players are in real trouble going forward, whoever is left in mainstream media is going to partner with whoever is left in digital media."

Facebook and Google

Smith said the main issue facing the industry is that two companies control the internet: Facebook and Google.

“When the internet started you had tens of thousands of sites but what is going to happen is there will be three or four big sites and everyone else is going to get shut out. We used to talk about democratisation of news and of content, now we're coming to this point where have massive power in hands of a few companies.

“If you look at online video and mobile video, 70 per cent is both Google and Facebook and they take the lionshare of the cash. You have the majority of your business run by someone else. If they change their algorithm your business gets upended.

"What we realised two years ago is we couldn’t be hostage to Facebook, Youtube and the other big players so we have to go off platform and be platform agnostic," Smith mused.

The third force

With Facebook and Google storming the industry, Sorrell invited Smith to predict the third force to disrupt the industry.

“Snapchat is necessary as an antithesis to the hedge buying power of Facebook” Smith said, “It has to be there so it will get a lot of support from brands and content providers. Tim [Armstrong, chief executive at AOL] is a really smart guy but Yahoo is floundering, I think he is going to take that and do something interesting.”

On a closing note, when asked to predict the outcome of the US Presidential election, Smith said: “As of today Hilary will have health issues so there will be a new democratic candidate, Trump will get support of all the malicious. And then there will be a civil war.

“The sad thing is it is going to be great for news but bad for the country.”

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