Sorrell speaks

WPP chief executive Sir Martin Sorrell shares his thoughts in an exclusive interview with Philip Smith.

If Sir Martin Sorrell is truly the advertising industry barometer that so many people around the world say he is, then media can rest easy. Although he has been delayed for his interview with Media Week at the mediaweek.tv studio thanks to a late-night flight back from the US to London, Sir Martin is on fine form this morning. Undimmed by the heat of the studio lights, his famed focus and drive is apparent as he answers, in surprising detail, a range of questions from Media Week readers.

Happy to deal with the broadest issues in the global media market-place, he is also surprisingly helpful when faced with one graduate's query about how to get ahead in media.

What is most remarkable talking to Sorrell in person is his grasp of detail, without reference to any notes, and seeming ability to recite pertinent facts and figures.

You would expect WPP's chief executive to tell you what Group M - which it owns alongside MindShare, Mediaedge:cia and MediaCom in the UK - is forecasting for the market in 2007. But he can also rattle off the number of mobile subscribers in China (400 million), the market cap of Google (£77bn), the size of the direct and digital markets globally, Publicis, IPG and Omnicom's revenues, and how big the internet could become (20% of spend or more) without hesitation.

Back in August, WPP's half-year results showed that its activities in the UK suffered compared to revenue growth elsewhere (it was the only market not to show double-digit growth). Yet Sorrell is positive about the future.

Unsurprisingly, considering his continued championing of the digital world and new media channels, digital - and mobile activity, in particular - is the source of some of that optimism.

"The UK is the market in the world that probably has the highest concentration of internet mobile digital activity," he says. "Group M forecast actually about this time last year that the market, (or the) direct internet advertising proportion of the whole market, would go up 14% - against a worldwide average of about seven - and then this year our aptly named forecaster, Adam Smith, who does the global forecasting for Group M, is forecasting 18% for this year."

So some of the issues the market faces are caused by media fragmentation, but so-called traditional media channels are also giving reason for hope.

"We have a very vibrant print market," he says. "You're driving in London, you get one newspaper thrust in one window and one newspaper thrust in the other window, so it's a very competitive marketplace.

"Other people say and (it's not just) British people saying it, that we probably experiment more and that's probably true in terms of media; we're quite sophisticated, so it is a very interesting market, fragmented or not. And the internet, direct and interactive have become stronger here, certainly than in France, Germany, Italy and Spain where it's all very much in its infancy."

He is quick to place growth in context, but seems pleased by the positive signs of returning marketing confidence in the UK that the IPA's recent Bellwether Report has highlighted.

There are two key points in his eyes. "One is a stabilisation in the UK market and a bit of growth, thank goodness. The UK remains probably the toughest part of our operations from an industrial point of view, but the comparatives have got easier," he notes. "On the other hand, we're seeing the whole of western Europe start to move up a bit. France is a little bit better, Germany - maybe there was a false storm early last year and it seemed to get a little bit worse as we went through the year - Italy's got a little bit better and Spain continues to motor on faster than the rest of western Europe, so I think the UK is benefiting from (that)."

But if you are sick of hearing Sorrell, and other media men, bang on about digital's potential, then be warned: that seems unlikely to change.

He quotes the world's favourite search engine to prove his point: "Google has this wonderful statistic, which it is self-interested in, but we spend 20% of our time online. If that's the case, then internet activity or direct activity should immediately go to 20% (of ad spend)."

It's a cliche to mention the current pace of change in the media market, but all of those issues do pose a challenge to agencies and the agency model, he says.

"The media agencies have got exactly the same issue (as each other); in order to be sort of hip, cool, sexy, attractive to clients, they have to demonstrate a fundamental understanding of the changes that are taking place. That's not only the changes from network to cable or satellite, but the changes in terms of network to mobile, or to internet or interactive or PVRs, iPods, video iPods or iPhones - whatever it happens to be - and they've got to demonstrate a fundamental understanding, otherwise they'll be caught with their trousers down."

But to get ahead you have to spend. For this notoriously aggressive buyer of businesses, Sorrell says the digital market poses a unique challenge. What is a business worth when you cannot prove profitability?

"That's what we're seeing in the digital space," he says. "Having said that, we'll probably all regret the fact that we didn't do deals or start to do something about it a little bit earlier. We waited to see the proof."

It's not just the price tag of digital businesses that can cause problems, believe it or not, he warns. Watch out for those pesky bloggers.

"I nearly got blogged to death for calling the web the greatest sort of communist influence or socialism; let's call it a democratising influence," he recalls, smiling.

"What it has done is made information available for free, certainly at the margin if not at the average cost, and therefore the consumer has access in a way that he or she never had before and, as a result, their media consumption habits, have changed remarkably."

Yet some things never seem to change. And that is the struggle - to get that first foot on the ladder, as one of Media Week's readers' questions points out.

Sarah Window, currently studying advertising and marketing at the University of Lincoln, will be surprised to hear of a unique offer from one of the most powerful men in media.

She wants to know why the industry is so "discouraging" in getting new graduates into the media agencies and how students can make the best of themselves to get that first job.

"Persevere" is advice you might expect from many at the top of the media tree. But while the entry period for a WPP Fellowship has closed, Sorrell is keen to help.

"She can apply, and failing that she can just send me an e-mail at msorrell@wpp.com and I'll see whether anything can be done," he promises.

Yet more than 20 years after starting WPP - originally a basket-maker - on its path to the top of media, Sorrell believes the industry, now more than ever, is a better place to start a career. Not only that, it is more important than ever. "By and large it's better now than it has been, and media is actually more important than it ever has been, because there's this continuous debate as to who should control the relationship, or influence the relationship. Should it be media or creative or indeed other parts of the marketing services business?"

- The full 30-minute interview with Sir Martin Sorrell is available to see, for free, on mediaweek.tv from midday today (Tuesday).

SIR MARTIN SORRELL'S CAREER PATH

- 1968: Awarded an MBA from Harvard Business School, having graduated in economics from Cambridge University

- 1970-74: Managed the commercial and financial affairs of sports personalities and celebrities at the Mark McCormack Organisation

- 1975-77: Business and financial adviser to British food retail entrepreneur James Gulliver at Argyll

- 1977-84: Group finance director at Saatchi & Saatchi, where he amassed experience for his future at WPP by playing a key role in planning the firm's international expansion

- 1985: Founded WPP, taking the position of chief executive. He has since grown the business to 97,000 employees in 106 countries around the world

- 1997: Appointed as ambassador for British business by the Foreign & Commonwealth Office

- 1998: Appointed to the Board of Dean's Advisers of Harvard Business School and to the board of the Indian School of Business

- 1999: Appointed by the Secretary of State for Education and Employment to the Council for Excellence in Management and Leadership

- 2000: Knighted in the New Year Honours List

- 2001: Received an honorary doctorate in business administration from London Guildhall University. He is also a governor of London Business School, a member of the advisory board of IESE in Spain and also on the Dean's Advisory Council for Boston University School of Management, and deputy chairman, London Business School

- 2003: Asked to serve on the Modern Apprenticeship Task Force, launched by the Department for Education and Skills

- 2006: Appointed non-executive director of Formula 1

- Sir Martin is also a special adviser to the board of Loyalty Management UK, operator of the Nectar programme, and serves on the advisory council of KPMG. He is a trustee of the Cambridge Foundation, a patron of Cambridge Alumni in Management, a patron of Christ's College Cambridge, a trustee of the Royal College of Art Foundation, and a member of the Corporate Advisory Group of the Tate Gallery. In addition, he is a patron of the Queen Charlotte's Appeal at Hammersmith Hospital, serves on the board of the National Deaf Children's Society and on the National Appeal Board of the NSPCC

- We put a few of Sir Martin's predictions and views to some key players in media to see if he really is an "industry barometer"

- There are big opportunities for the mobile networks, with Group M forecasting massive growth in mobile.

"With mobile penetration at saturation point in most developed markets, it's no surprise that even the most cautious commentators are forecasting its success as an advertising medium. However, the endgame is by no means clear and whether Nokia, Vodafone or News Corp will turn out to be the "media owner" in this sector is yet to be decided. The alternative is that we bypass existing telecom technology altogether and the winners will be the existing www operators delivered via an effective hand-held device."

- Greg Grimmer, managing director, Zed Media

There is a conservatism among clients - a focus on short-term rather than long-term performance and a lack of risk taking as a result of things like the Sarbanes-Oxley financial disclosure legislation.

"Yes, clients have always had short-term pressure to deliver results. However, the forward-thinking ones still realise the need to take calculated risks to help differentiate themselves and create commercial value.

"We base our ethos on challenge and innovation, so we tend to attract like-minded clients. Magners saw a market opportunity and gained first-mover advantage by swiftly and decisively putting significant investment behind its brand, subsequently achieving enormous success. Similarly, Thomsonfly now serves more UK airports than any other carrier after it spotted a gap for a regional airline and invested in it. Long may this entrepreneurial approach continue to flourish in UK plc."

- Marc Mendoza, managing partner, MPG

Google has this wonderful statistic, which it is self-interested in, that we spend 20% of our time online. If that's the case, then internet activity or direct activity should immediately go to 20% (of ad spend). Do you think this will happen? Can digital continue to grow at the same rate as last year?

"For at least the next few years, digital will continue to be the fastest growing media in the UK. There are a number of big-spending categories such as retail and FMCG that still underinvest in the medium and they will help to fuel future growth. By the end of the decade, online will have overtaken TV and have about a 22% share of total ad spend."

- Neil Jones, managing director, Carat

The underperformance of the UK market last year was caused by fragmentation, specifically caused by the rise of digital and mobile, and a more competitive marketplace than the rest of Europe.

"The UK is especially rich in supply across all channels, both old and new, so I'd agree that competition and fragmentation were key factors in the non-digital sector's relative underperformance. The UK market also includes competition from the BBC's uniquely extensive activities too.

"There's also another dynamic that will become increasingly important. The industry figures are based on activity that can be tracked and valued. The proportion of budgets being spent on integrated, P2P, guerilla and other less measurable practices is on the increase - and this will begin to make the published figures appear less representative of what's really happening."

- Damian Blackden, director of strategic marketing technologies, Universal McCann.

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