Brand Strategy S4 Capital Coronavirus

Three actionable insights with… Sir Martin Sorrell


By Kenneth Hein, US Editor

November 2, 2020 | 7 min read

Sir Martin Sorrell, the outspoken former chief executive of WPP is known for not backing away from the controversial or from being eager to drive revenue. He calls S4 Capital, which he’s been building up since his departure from the ad giant, a “communications agency for the new marketing age.” Here, Sir Martin shares his insights for future success:

Sir Martin

Sir Martin says: 'marketers need to take back control.'

1. Agility is the key pre- and post-coronavirus corporate attribute.

“Covid-19 has accelerated the need for digital transformation and digital disruption. If you ask any CEO, CMO, CFO, CIO, CTO or chief sales officer what frustrates them about their organization – particularly analog organizations, not so much tech organizations to be fair, although that might be the case in a few years’ time – it is the lack of willingness and the lack of response.

​In the ad holding companies, that’s what they say all the time. They are aircraft carriers. They're not motor torpedo boats. They just can't get out of their own way. When you have an analog core, which most companies do have, and you're trying to shift to digital, the analog core has always held you back. One of the interesting things about Covid-19 is it's removed the resistance. We see a lot of change agents gaining ground inside companies and being given more oxygen.

​The conglomerate model, for want of a better description, is now past its sell by date. You need focused groups. In a digital world, the need is for brain, not brawn. Scale for scale’s sake is not necessary. What's necessary is brain. You don't need muscle. You become muscle bound if you have too much muscle.

​So, I would say, coming back to agility, it is absolutely the key corporate attribute – not just as a result of coronavirus, but before coronavirus.​“

2. It’s not oil any more, first party data is the most valuable resource on the planet.

​“We’re seeing now with Google's shift on third party cookies and we're seeing with Apple’s shift in terms of the nature of its hardware, or what is hardware can do, that first party data is absolutely critical.

Consumers have to understand fully what they’re letting themselves in for when they sign up on a site, which is something we have failed to explain. I mean, when was the last time when you signed up on the site you said ‘no?’ It’s always: ‘accept.’ It’s not like you’ll have a lawyer tell you what you’re letting yourself in for. Part of the problem, that the industry has caused for itself, is that consumers don’t know what they’re signing up for. So, you have to make them fully aware and, if they want to, they should be given the option to sell [their data].

Then there’s managing that data at the client level, integrating that data. Unfortunately, many of these companies [databases] have grown organically. They’ve used different systems, so the data doesn’t talk to one another. What we hear continuously from FMCG, automotive, financial services, across the board, is their inability to harness the data that they have access to because of different verticals, or the systems are different, or they acquired companies – which makes it even more difficult to integrate.

First party data enables them to drive the creation of digital advertising content at scale, personalization at scale. It is then pumped out algorithmically or programmatically or through digital media. We then get the results. And in real time we, if necessary, to improve the ROI, change the creative. Then we dump it out again, get the data and change so it’s a continuous loop like an election campaign without an election date. It’s related to the agility issue because you're operating in real time. You’re operating 24/7. Always on.”

3. Marketers have to take back control.

”Marketeers have surrendered control. Too few marketeers are CEOs of companies. There are probably too many CFOs who are CEOs of companies and I can say that as an ex-CFO. I think this started in 2008 after the Great Recession. Then there's a huge pressure in 2009. It rebounded in 2010, but ever since then and up to 2018 there’s been a relentless pressure on cost.

It‘s nonsense that it‘s Google and Facebook that are putting pressure on the holding companies. The simple fact of the matter is the clients have been so focused on cost, they put pressure on the agency middlemen or middle women, and they push them.

Remember the chat around ‘non-working’ costs around advertising — basically on production costs. But you know this phrase ‘non-working’ and the implication that a lot of what the agencies did wasn‘t working or it wasn‘t working well enough, so you had to get rid of it. This is huge pressure. So, instead of asking media owners for 60-day credit or 90-day credit, they asked the agencies. They weren’t asking, they were demanding. You want to win a piece of business? You won't get paid for 60 or 90 days, even if you have to pay the media in 30 days.

Agencies are put under huge pressure. Clients put them under pressure after the Great Recession. The vice tightened and tightened. Then in 2016, the walls in the walled garden started to go up. And Google, Facebook and others said you know privacy reasons, interference in elections, brand safety, whatever it is, you're not going to get the data that you thought — which goes back to that first party data point.

And so, the pressure started to increase. Clients having devolved their marketing activities, reduced cost, reduced their marketing resources, surrendered it to outsiders like agency groups or whatever or consultancies. Now, they‘re starting to say, ‘look, we've got to control this much more effectively.’ Just like the Brexit voter who wanted to take back control from Brussels, the marketeers are saying, ‘we now have a little bit more wiggle room. It‘s a 24/7, always-on world. We have to control things much more effectively in a real-time way’ for the reasons that we‘ve gone into in relation to agility and first party data. So, we have to control this more.

That‘s why with in-housing, for example, if you are having to manage things 24/7, it’s better it's in-house. Compared to if you have to go brief the agency, the agency comes back in a few days’ time and says, ‘you know the brief's not right and we have to redo it.’ Or comes back and says, ‘you know the creative director’s mother or father is ill.’ That doesn't work anymore. You have to have it in real time. So, control of some of these functions becomes more and more important.“

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Brand Strategy S4 Capital Coronavirus

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