“Forgive my aggression, but this view that creativity resides only in the so-called creative agencies, is obnoxious.”
That’s communications industry wizard Sir Martin Sorrell’s take on internal wars for credit between various arms of the industry. As CEO of WPP, one of the world’s biggest communication groups, Sorrell knows what it is to keep a massiv empire made up of diverse brands running. He relies on aggression – coupled with wisdom and speed – to build his company and enter new domains.
The story of how WPP was formed in 1986, and how it challenged just about every conventional way of working known to the industry until then to reach the top has been told several times. Every time, the point highlighted is Sorrell’s foresight of investing in new forms of communication, new markets and in later stages, technology, data analytics and consumer insights. These strategies, and a strong management team, catapulted WPP to its global leadership position. As WPP celebrates its 25th anniversary, it is busy indeed. A growth year after two tough years, consolidation in its new media platforms and higher reach in its consumer insight business are just some of the things on the company’s agenda.
Emerging from the global meltdown, WPP’s performance is already headed in the right direction. The first five months of 2011, according to Sorrell, have recorded growth for most markets including the US and UK, but India and China are leading the charts.
Year of growth, again...
At the company’s AGM last month, the trading update for the first four months of 2011 had the like-for-like revenues rising by over six per cent, and the gross margin up by almost 7 per cent. Revenues, profits and operating margin were in line with budget and forecast for Quarter-1, and well ahead of the previous year. The company’s average net debt is down £590 million to £2.338 billion, reflecting strong cash flow. However, a cautious Sorrell admits WPP is in a “better position today”, but is not convinced that the worries of the global meltdown are over.
Sorrell says people are worried about what’s going on in some key markets. “The input prices in markets like the US and UK, the US’ inability to fund its deficits, Japan’s recent tragedy, turmoil in the Middle East and above all withdrawal of QE2 have led to various concerns. While WPP is in a better position than it was in the pre-Lehmann days, in general, people are worried. What happens now is also very important. Do we get an extension of QE2 into QE3? It’s as if we have been on drugs for the last couple of years, and now we are cold turkey. So, are we going to take some more drugs? Much will also depend on some of the things we are likely to see with American presidential elections around, so there are several uncertainties right now,” he observes.
Sorrell emphasises that WPP’s profitability is only “getting there”. However, he is positive about the performance of markets like India. According to WPP’s trading update of 2011, BRIC (Brazil, Russia, India, China) countries were growing at 17 per cent. “India and China together have been growing at 18 per cent. The first five months have been very good. In India, we are now approaching $500 million revenue, and we have 10,000 people working across WPP offices. Our business continues to be very strong,” Sorrell says.
The statement is significant because in the last four years, many holding companies like Omnicom, IPG and Publicis Media Groupe have enhanced their presence and invested significantly in the Indian market. However, WPP is the market leader by a large margin, and the WPP chief does not expect this to change anytime soon.
India’s leading role in technology & consumer insights
WPP’s growth strategy is based on three pillars –
1. New markets - where the company is focusing on the next 11 after the BRIC markets
2. Consumer insights - where market research forms a core component
3. Role of technology and data analytics - where WPP has taken bold steps including the newly formed Xaxis, that combines its demand-side data and technology resources with the trading leverage of GroupM agencies into a single comprehensive source.
In all these aspects, India is leading “full frontal”. “We have a big business in India, and we are very proud of it. Acquisitions would be a way to grow if and when required. But for us, the future is about focus on new markets, consumer insights and technology & data analytics, and India is a very strong market for us on all three.”
Sorrell points out, “On the technology front, India’s importance has not just been in the Indian or Asian context, but worldwide. Bangalore has been a world technology hotspot. Things are progressing in the right direction in technology, but we’d like to see it applied faster. When I look at Indian mobile networks, the market has three strong players – Airtel, Vodafone and Reliance, all with 100 million plus subscribers, with more coming. So, India will play a very important role in the mobile revolution.”
According to Sorrell, all countries need to improve technological infrastructure, but countries like India, where it is being built, would have an advantage. “3G or 4G would be adapted faster. Countries where infrastructure is being built have an advantage because you don’t have to dig up roads which you have to do in the UK. I was in Israel last week, and it is amazing how rapidly they are picking up broadband.”
WPP’s data analytics business and research are other domains about which Sorrell is upbeat. But while holding companies lay so much emphasis on technology, are the right steps being taken to marry consumer insight to technology before creating effective communication? In pure Sorrell style, he points out that while holding companies talk about the importance of technology, very few are doing anything about it. “Linking the silos is critically important,” he adds.
Holy grail of communication services
One problem that many media holding companies face today is of coordination between various assets – media service brands, creative, design, PR, consumer insight and so on. WPP is no different, but that issue is on the company’s radar. Sorrell says, “That is the Holy Grail -- getting 1,45,000 people to know what the others are doing. It is difficult, particularly in a multi-branded company primarily built by acquisitions. But it is improving now. New technology companies are also enabling us to understand more of what consumers want. These companies are often media owners, and they have a good sense of understanding the consumer and how their habits change. There is a big opportunity there for all of us, and we have not exploited it as much as we should have.”
One step in this direction was the launch of Xaxis on June 27, 2011. “We just announced Xaxis. It is not a new media platform, but an extension of our existing ones like 24x7 Real Media, MIG, B3 and others. Now, we have made a new media trading desk. It would soon be the biggest and richest in terms of content, specially publishing premium content,” Sorrell explains.
In Xaxis, WPP brings together a portfolio of audience-buying capabilities that have been independently developed and optimised in various parts of GroupM and WPP Digital over the past three years in businesses including B3, targ.ad, GoldNetwork, GroupM DSP and the GroupM Marketplace. In 2010 alone, the businesses that have combined to form Xaxis executed approximately 4,000 campaigns for more than 400 GroupM clients. Xaxis will be led by CEO Brian Lesser, formerly global GM of the Media Innovation Group (MIG), WPP’s digital marketing technology company.
Consolidation is perhaps the way WPP is viewing many of its new media offerings. In February 2011, WPP Digital launched Possible Worldwide, a global interactive marketing agency. Formed through the combination of WPP’s digital agencies Schematic, Bridge Worldwide, Blue and Quasar, Possible Worldwide was created for measurable interactive marketing for brands.
Road ahead in India
Unlike WPP’s digital acquisitions in other markets including Brazil, in India, the company has been more cautious. It’s been a while since one heard of high-profile WPP acquisitions. Clearly, the company’s focus is on consolidation and it was evident when Possible Worldwide donned a different avatar when Quasar was working with the GroupM offices. Sorrell explains, “That is to help them work more closely, because soon, digital would not be separate from our overall offering to clients. Everything is moving in that direction.”
Sorrell is particularly charged about the role India can play in the mobile revolution. He says, “In India, the digital growth would be more mobiledriven. Mobile leapfrogs the PC, the thing you know is that capacity is going to improve, quality is going to improve and prices are going to fall. Mobile telephony will become a cheaper way to access the internet. Mobile apps, iPads app, iPhone apps will become more sophisticated. You will see a general increase in activity in that area.”
“If we replicate the India success in other countries, I’d retire”
IMPACT met with Sir Martin Sorrell, CEO, WPP on the sidelines of the Cannes Lions International Festival of Creativity, and found him excited about his company bagging the inaugural Holding Company of the Year award. In this conversation with Noor Fathima Warsia, Sorrell speaks on topics ranging from Cannes to the role of holding companies. Excerpts:
Many holding companies such as WPP have mini holding companies for their media assets in the form of a GroupM. Do you think companies have been able to outline the role that these mini holding companies should have?
I don’t think we have necessarily got the balance right between GroupM and the four media brands – Mindshare, Maxus, MEC and MediaCom, and that continues to evolve. In my view, GroupM should be the trading platform, where we consolidate. We should go to the media as GroupM, to get benefits in terms of leverage and in terms of quality. There are two elements here – one is quantitative, we get more for less. And the other is qualitative, where we work with media owners in an increasingly fragmented world, to be more effective for our clients. We can differentiate ourselves from our competition with new ideas and be of greater value to our clients.
There is a continued debate on whether creative agencies continue to lead communication...
Media assets are creative too. Forgive my aggression, but there is this obnoxious view that creativity resides in the so-called creative agencies. Media can be creative, finance can be creative -- there are other people who have creative bones too. The reason why media agencies were separated was because of the arrogance of creative agencies, and now there is a tussle as to who leads. My view is that media must become more important than the message. You tailor messages for media, and not the other way round. That has been the big shift. At the very least, it is equally balanced. It used to be, when we were couch potatoes watching TV all the time, that creative was in the ascendancy because there was the big idea that you applied to the only media at the time – print or TV. Now, because of the fragmentation of media, you have to tailor the creative for the medium. The balance has shifted and what it demands is greater cooperation, less ego and turf and territory.
It may be difficult to get ego out of the equation...
Yes, even journalists have egos. Good people have big egos and that is why it is that much more difficult to manage good people.
But we see even media and PR awards won by creative agencies
Yes, but that is changing. It is a bit ironic that advertising agencies win media awards. The reason they do is because they are the most practiced in entering awards. There is a skill or a technique to this, and if you did the process right, you would get more awards. People most accomplished in this are creative agencies, and the least accomplished are design or PR people, who don’t understand the politics of it all. But there is a learning. We have done very well at Cannes this year, much better than we have done before. If I look at performances so far, our PR agencies have done very well in 2011. Last year, every PR award was won by an ad agency.
Do awards still make a difference, given scam allegations and so on?
Awards make a difference to people and clients. There is a thing about scam awards. Creative people like John Hegarty, for instance, have concerns on these subjects and there is truth in that too. But awards make a big difference as they inspire people and clients, although clients do get worried about creativity and effectiveness.
Feedback: noorw@exchange4media.com
