He turned an average-sized plastic manufacturing company into a marketing services giant with a market value of $20 billion. After 33 years of service, he left WPP in the midst of controversy, and within a month formed S4 Capital, providing digital marketing solutions to a broad array of clients. At age 74, executive chairman Sir Martin Sorrell still is one of the highest-paid executives in the UK and a revered figure in the communication world, someone who continues to adapt and embrace change when it happens. In an exclusive interview with Communicate, Sorell talks technology, digital and creativity.
You have been a lot more focused on the digital part of the industry. How does this translate into your new company?
There are four core principles around S4 Capital: first, we are purely digital. Digital is an industry that is about a trillion dollars [worth]. If you look at the $500 billion in media, about $300 billion are in traditional and about $200 billion are in digital. So, we’re very focused on the digital part and within that area, on first-party data, driving content and driving programmatic. The second principle is what we call roundly the trinity of first-party data driving digital content, digital advertising and programmatic. The third is a mantra around [being] faster, better and cheaper: being faster and more agile in execution – because speed is a competitive advantage – means using all new elements of technology as rapidly and effectively as possible; and being cheaper means being more efficient. The fourth principle is being unitary: we’re not keen on outsourcing, that creates too much fragmentation; we’re keen on unifying our approach inside the company, because clients are focused on the best people working on their business.
Why, do you think, is the ad spend in traditional media still at $300 billion?
The digital share of the total [ad spend] is growing at a rate of around 20 percent. The traditional media industry may have a $300 billion [ad spend], but it’s growing at only 2-4 percent. By 2020, digital is expected to make up 50 percent of the market at least, maybe more.
Do you have an agenda to reshape the digital world in terms of advertisement industry?
There’s no agenda to change the world but there’s a new era. We think the trinity model is the future and fit for all the different formats. We’re not in the business of cutting down 30 seconds or 60 seconds off TV commercials for mobile, desktop or iPad. We are more focused on formats. The best example is Netflix, where you get first-party data, you look at what consumers are doing in terms of media habits, and then create content specifically for them. You look at the results, you have the creative power.
Lately, many industry players have been saying that the best time to push ads on consumers is while they are in the right mood. Do you agree?
No, you do not push it. You try and implement it at the time that you think is relevant. For example, depending on which website you go to, we will serve you different content. It could be one second, it could be three seconds or ten seconds. What we’re trying to do is to provide the appropriate creative at the appropriate time. It’s not pushing, it’s serving at the right time, when you think consumer is in the frame of mind to be more receptive.
How do you think artificial intelligence is going to change the industry on the long run?
It’ll make the process more effective and efficient. If you’re managing a brand, you’re always sending out messages. Many clients have said that we have to be more agile and flexible – not necessarily seek perfection at the beginning but get to perfection over a period of time. Today, speed is a competitive advantage, particularly when you’re dealing with millennials. In other words, you’re continually pumping out messages and receiving messages back in the form of data. Your competitors are doing exactly the same.
In markets where digital is not well developed yet, how do you bridge the gap between your clients’ needs and their consumers?
We mainly focus on digital because that’s where the growth is. Even in a remote market where there might not be much digital penetration right now, it will grow. S4 is about focusing not on the absence of margin, but on top line growth, and that is purely on digital. Growth rates might be low in certain places right now, but that doesn’t mean you ignore it, it means you focus on it.
What sort of challenges are your clients facing?
The biggest challenge they face is this question of agility and adaptability, especially in legacy companies. Even the pure tech companies, as they get bigger, face this issue of being too vertical in their approach. They have to be much more horizontal in their approach, thinking across the business and of how people work together. But I think the biggest issue is in the legacy businesses: they sort of have “analogue” businesses that are their cash cows; so, as they develop their digital capabilities, they are finding it very difficult to move quickly enough.
Amid all this technology and data, creativity is still a key component in this industry. What is creativity for you?
A lot of people say that I’m not creative. Our primary emphasis is on growth and technology, but not on the absence of creativity. They’re just different. Data does not destroy creativity; it informs it and proves it. Creativity is still as important as it ever was. It is fuelled by data, and the way that it’s executed today is very different from the way it was executed before. So, it’s just about adapting the change.
This interview has appeared in Communicate’s June print edition.
