When Sorrell met Whipple: ‘agencies aren’t exempt from change’

When Sorrell met Whipple: ‘agencies aren’t exempt from change’

Two ad industry titans — Sir Martin Sorrell, executive chairman of S4 Capital, and Brian Whipple, CEO of Accenture Interactive — addressed a packed house at The Drum Arms’ activation at the Cannes Lions festival yesterday (18 June), each weighing in on key issues facing advertising.

In a discussion led by The Drum’s editor Stephen Lepitak, Sorrell and Whipple addressed the future of the industry and whether advertising is still relevant, what approaches the holding companies should adopt to successfully move forward, and how marketing can change the world.

Is the ad industry still relevant?

Lepitak’s first question received a unanimous yes.

“One hundred percent yes,” Whipple asserted. “Products still need to be marketed, advertised; emotions created, beauty seen.” He suggested that lower growth at agencies doesn’t mean advertising is going away; instead, it implies that their serves have been commoditized to an extent.

Sorrell added that the slow growth is in traditional advertising; digital, on the other hand, is seeing fast growth and presents an opportunity to agencies that improve their use of technology and operate with greater efficiency and agility. “[Advertising] is essential, but…the traditional agency model is not fit for purpose; it has to change,” he said.

Whipple concurred on the need for agility: “The world does need super-slick, high-end digital content rendered in a more agile way. That’s a fact.”

Whipple also pointed out that agencies should expect and embrace change, rather than fear it. He pointed out that 41% of companies that were in the S&P 500 19 years ago have gone away. “There’s a notion that that level of change shouldn’t happen to us. Why wouldn’t that happen to us, too?” he asked.

Sorrell’s advice: “Go where the growth is. That’s the key.”

What is the best next approach for the holding companies?

Short-termism. Bloat. Organizational silos. Sorrell and Whipple agreed that the Big Six holding companies face significant challenges that require thoughtful consideration on how to change, but they need to move fast in an impatient industry.

Sorrell pointed out that the biggest problem the holding companies share is that they’re publicly traded. “Our businesses are inherently messy,” he said, adding that to succeed, they need to do more than evolve. “It’s not about evolution; it’s about revolution.” But that won’t happen as a public company, he asserted. “You have to do it in private."

Sorrell called out Omnicom Group’s chief executive as a leader who needs to rethink his approach. “Omnicom’s John Wren a hasn’t got a strategic bone in his body…, but in terms of performance the company has been superb,” Sorrell said. “But they haven’t strategically moved the needle.

“WPP has tried to move the needle, but hasn’t as much as Publicis, [which] isn’t what they were a few years ago. Dentsu is best positioned, with its focus on digital, data and media…. IPG is doing the best, [but] strategically hasn’t moved the needle as much as Publicis or WPP.”

Despite his time at Omnicom and IPG, Whipple demurred, saying the holding companies “are not my area of expertise. If I bring my leaders together…. how much we talk about how we compete with holding companies adds up to a whopping zero minutes. It’s not out of disrespect. We’re in an adjacent business.”

Even so, he concurred that, from his view as an observer, the holding companies move too slowly. Some of the reasons for this: they have too many P&Ls, lack the needed technical skills on their team, and are often held back by what he called founders’ cultures.

Taking an unexpected turn, Sorrell pitched Whipple on what he sees as an opportunity for Accenture Interactive: “If I was Brian, I would covet GroupM,” he said, which drew gasps, sniggers, and full-on laughter from the crowd.

“How you unify companies in a meaningful way and still preserve their [unique] cultures is a challenge,” Sorrell asserted, adding that instead of buying lots of small companies, Accenture Interactive could buy one large one.

Whipple’s response: A hard no. “GroupM, from what I’ve seen, is a group of smart people... and closer to us than other parts of WPP, but [that] holding company structure is not right for us.”

When new companies come into the Accenture Interactive fold, they need to do what’s necessary to “keep the lights on” at first, he noted, then over time “redeploy to solve for a number of consumer problems, not just sell more ads or more programmatic.”

How can this industry change the world for the better?

The shared answer to Lepitak’s final question: purpose.

Sorrell asserted that the model that he espouses (i.e., better, faster use of digital, content, and data) embraces purpose. “There’s too much short-term thinking,” he said, adding that CEOs’ tenure these days tends to be about five years. “If you’re in business for the long term, you’re going to embrace all of your stakeholders. Long-term brand building is at the core of what we do.”

He was quick to point out that there’s a bigger external issue that advertising with purpose needs to address: underlying today’s populism and related trends is the fear of job loss related to technology advancements. “That’s the tension,” Sorrell said. “That’s what we need to focus on.”

Whipple added that it’s good business to be at that intersection of creative, technology, and purpose. “The world is changing,” he said. “Generally, people [over 40] care about the world; the issue is, the younger generations care more.” So, he added, deploying creativity and technology for good could help create job satisfaction and save employment.

“If we want to attract the next generation of talent and sell into the next generation of clients, then there needs to be a purpose — maybe not in every single project,” he said, but certainly in the majority.

“We’re all going to need to work together,” Whipple concluded. “We need to find a job where we can be ourselves at work. If you have to check in to your office and change to be someone else there — that’s something to think about.”

Listen to the full exchange below:

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