In the era of rapid digitisation, the successful global marketing services company will be a disruptor with a unitary business model.
That was one of the chief insights from a man who has spent more than three decades at the apogee of world marketing – Sir Martin Sorrell, Executive Chairman of S4 Capital – as he was interviewed by the Worshipful Company’s newly-appointed Master, John Farrell.
The interview marked Sir Martin’s installation as an Honorary Liveryman of the Company and was the first of a series conducted by the Master to explore the theme of his year in office: Marketing – leading business from the front.
Sir Martin, former CEO of advertising giant WPP said: “The industry is rooted in views and practices which look back to the previous millennium, not the future, which is why the traditional part of the industry is having such a tough time…The holding company model is past its sell-by date. Right now the need to integrate and unify is crucial. You need one fully-integrated unitary company with one P&L.”
Sir Martin said there is little purpose in companies competing with one another when they are under the same ownership. Covid-19 has accelerated digital transformation and it is only the disruptors and change-agents who will seize the many opportunities. Traditional agencies have been left with a diminishing creative core, which will decline further, he said.
Interviewed on Zoom, Sir Martin said that while investment in traditional media has taken a hit of between five per cent and 15 per cent during the pandemic, digital media grew by four or five per cent. The paradigm now is Netflix, using first-party data to provide personalised content at scale, distributed on digital media.
But the use of data can make creative people dismissive, claiming it undermines creativity, he said. The reality, however, is that they do not like having to prove the strength or veracity of their ideas. There is a tendency to look back on the pre-digital past with rose-tinted glasses. When used correctly, data informs creativity.
The future of marketing is with “tech platform” people, he explained, and they would work to the mantra of “Faster, better, cheaper”. This is what is happening at S4, where the aim is to create a new age/new-era model with first party data driving the creation of personalized, digital content distributed by digital media, 24/7 in an always on world in a continuous loop.
He said clients such as Google, BMW and Mondelez all set the standard for digital leadership, along with Facebook, which has made significant changes under huge pressure. Healthcare and pharmaceutical companies also provided shining examples of businesses that have gone from pariah status to saving the world through their expertise in creating vaccines so rapidly. Their marketing operations are “super-good”, he said.
Invited to review his own career to date, he recalled the lowly status of marketing in the corporate pecking order when he began. “It was below the line and below the salt. For creative people it was not the thing to do. But it was the snottiness of the establishment that allowed the creation of media empires.”
He said when he famously took a controlling stake in WPP, he and his colleagues wanted to create a multi-national advertising and marketing services firm. “But when you start with a wire basket manufacturer there is little you can do. Growing organically just takes too long.” This was why the company had expanded through acquisitions.
He said S4 Capital is for him potentially a 10-to-14-year exercise, building out the growth in digital. “I want clients focusing on growth looking at the sky, not their boots - clients who are optimistic.” Given the extent of change in the marketing industry, any young person entering it now would be well-advised to learn how to code and speak Chinese, he added.
He said he expects the world’s advanced economies to come back very strongly after Covid-19 because of high consumer savings ratios, pent-up demand and implementation of business plans currently on-hold. While this year and 2022 will bring growth, inflation remains a potential threat beyond that. Societies will also have to make tough decisions on how they will pay for the current levels of financial support provided to individuals and companies. Poor relations between the USA and China could also present significant problems for business.
He was frank about the many potential pitfalls facing the UK after Brexit and said the country must pivot towards the Americas and APAC region. But he issued a warning about bureaucracy saying it could take anything up to ten years for the full effects of Brexit to work through. “We have huge talent but must not stifle it,” he added.
It was also important that businesses subscribe to the environmental and social agenda, he said. S4 had committed to zero emissions by 2024 and was instituting a series of tangible initiatives to increase internal diversity in recruitment and education and S4 will seek to be representative of the communities where it operates, he averred.
“Taking the long-term view on climate and diversity, it all fits into place because there is no contradiction in terms of long-term profitability. I think we over-complicate this stuff,” he said.