Stephan Loerke, CEO of WFA, in conversation with Sir Martin Sorrell at Global Marketer Week.

TRENDSETTERS: Sir Martin Sorrell Looks to the Industry's Future...

The Internationalist Trendsetters is written by Deborah Malone, founder of The Internationalist.
 

It's been quite a week for Sir Martin Sorrell.  His new company S4 Capital, trading on the London Stock Exchange, reported a remarkable first quarter with a revenue increase of 38% and gross profit up over 37%.  (Shares of S4 rose nearly 7% in London following the release of the Q1 report.) He then celebrated the opening of the company's offices in Singapore-- underscoring the importance of the Asia-Pacific region to the group's expansion plans. (Currently, APAC accounts for 7% of S4 revenues, while the Americas region represents 65%.)  Next, he flew to New York for a lecture at City College.

Sir Martin Sorrell's success has always been built on anticipating what's next (and what's profitable) for an advertising industry that must continually reinvent itself to stay relevant to the needs of marketers as they interact with ever-evolving consumer expectations.  He recently shared his views on the industry's future directions at the WFA (World Federation of Advertisers) Global Marketer Week and admitted that he was "more determined than ever to reshape the industry."

As most know, S4 Capital was conceived as a new-era digital advertising and marketing services company to be built through acquisitions across three strategic capabilities: first-party data, digital content and digital media planning and buying.  Right now, the company's core components are MediaMonks, the digital creative content and production company, which represents two-thirds of the group's total gross profit, and MightyHive, the media consultancy that also provides services in media operations, data strategy and analytics, which comprises the other third of S4's total gross profits.

At the core of Sir Martin Sorrell's new vision is a focus on speed. Not only is it a "competitive advantage and differentiator,"but it speaks to marketers' biggest challenges.  He has experienced what happens when there is a lack of speed at legacy organizations—even when they are trying to embrace digital transformation.  He talks about the frustration of senior management with organizations that move too slowly, particularly when the legacy parts of a business have long generated the profits and margins—until they falter in today's new business dynamic.  He adds that it's difficult to be nimble or innovative if you're "too siloed, too fragmented, too slow."

Unabashedly, S4's stated emphasis is on faster, better, cheaper executions for an always-on consumer-led environment.  Sorrell often clarifies that cheaper may not be precisely the correct word when discussing work or craft, but no client has ever disagreed with it.  Yet faster, better, cheaper is a true mantra at S4, and it can be delivered because the group is purely digitally. He explains: "The industry is about a trillion dollars of which half or about $500 billion is media. New, or non-traditional, digital media represents $200 billion, and is growing at about 20%. Traditional media is either flat or down, and the overall industry is growing about 3-4%.  We're interested in where the growth is."

S4's priority is first-party data, or specifically creating digital content and executing programmatic media buys driven by first-party data.  Sorrell's belief is that data-led planning will enable brands to take control of how their content most effectively reaches their best prospects and current customers.  He added, "Since 2016, we've seen the rise of walled gardens from platform owners, particularly The Fearsome Five-- Google, Facebook, Tencent, Alibaba, and Amazon—who won't share data.  Clients worry that these platforms have denuded marketing.  They thought the platforms would help develop a closer, direct relationship with consumers, but found instead that the relationship and their access to data was blocked. We now need first-party data to build resources that can produce strategic results.  Unilever bought Dollar Shave Club because they wanted the direct relationship with consumers."

When asked about new agency models, Sir Martin Sorrell acknowledges that not only do agencies have to change; clients must change, as well.  "There is no point in agencies having a unitary profit and loss if we have to deal with multiple points from the client."

Sorrell also notes that in the past, "agencies were trying to be indispensable.”  He now sees that ideas like Team Detroit, WPP's dedicated solution for Ford, while a revolutionary concept that worked well initially, faltered over time. "The client thought they were surrounded.”  Today, he believes that individual agencies need to collaborate to best serve marketers. "At S4, we now say we'll do anything you want—hybrid, out-sourced… What's in your best interest?"

He emphasized, "Clients just want results, they don't care where the talent comes from.” 

Interestingly, Sir Martin Sorrell also asked a rhetorical question: "Why is there such churn in the FTSE 100 or the Fortune 500?  The list of companies is tremendously different now than just a decade ago.  Why did those who stayed on the list survive?  Was it due to a brilliant CEO?  No… it was due to a push on revenue growth… and the reason we're outperforming the market is we're focused on where the growth is."

Sir Martin Sorrell was CEO of WPP for 33 years, building it from a £1 million "shell" company in 1985 into the world's largest advertising and marketing services company, with a market capitalization of over £16 billion, revenues of over £15 billion, profits of approximately £2 billion and over 200,000 people in 113 countries. 

Prior to that, Sir Martin was Group Financial Director of Saatchi & Saatchi Company plc for 9 years and worked for James Gulliver, Mark McCormack and Glendinning Associates before that. 

S4 Capital PLC recently merged with Media Monks and MightyHive, and is listed at the London Stock Exchange under SFOR. 

Sir Martin supports a number of leading business schools and universities, including his alma mater, Harvard Business School and Cambridge University and a number of charities, including his family foundation.