[caption id="attachment_48663" align="alignleft" width="150"] Sorrell: "$15bn [of WPP's revenues] is in areas Don Draper wouldn't recognise"[/caption]WPP chief Sir Martin Sorrell has been discussing the changing advertising landscape once again, this time at the ad:tech conference in London. In an interview with one of his underlings, Dominic Grainger, CEO, EMEA at GroupM, he told delegates that media and data would make up $9bn (£5.6bn) of WPP’s projected $19bn revenues for 2014,with digital responsible for another $6bn, leaving just $4bn generated by the “classic” advertising business. “$15bn is in areas that Don Draper wouldn’t recognise,” Sorrell said.
Continuing with the Mad Men reference, he said advertising now was not just about “the mad men and women, but also, the maths men and women”, relating the story of a recent pitch where the company was pitching to the CMO and the CTO and none of the other companies pitching for the business were the WPP company’s traditional competitors, but tech companies. “We come at it from the intangible, marketing angle, whereas the tech companies come at it from the tech angle; we are in a great position to fuze the two,” Sorrell said.
Returning to the Mad Men theme later in the interview, Sorrell told delegates: “Brand communications have to embrace the left brain and the right brain, the maths men and the mad men, the technical and the marketing, and I’m excited about that.” At the same time, he conceded that the people WPP employs in 10 years’ time will be much more analytical, technical and “engineering-like”, citing the example of Tesco’s purchase of consumer insight company DunnHumby. “It’s remarkable that Dunnhumby is part of Tesco,” he said. “A retailer that understands the importance of data.”
Sorrell was also quizzed about programmatic, and in particular, on the trend for brands to take programmatic buying in house. This, he said, could prove to be short-lived. He told delegates: “The best examples of in-house programmatic are companies that have done in-house buying before and now more and more of them are outsourcing it. It may be wishful thinking, but I don’t think programmatic in-house will be a long-term phenomenon because in-house agencies do not work, because people don’t want to work on one client, but on multiple clients, and the tech investment is costly, so in my view, it will be more of a temporary phenomenon.”
Looking at programmatic in the round, Sorrell said: “I don’t see programmatic as being a threat for us. It’s a threat if we don’t do anything, but otherwise, it’s an opportunity.”
Google and Facebook also occupied a good proportion of Sorrell’s time on stage. He described the companies, not for the first time, as “media companies masquerading as tech companies” and said that agency owners had to respond, adding that WPP’s role was to provide an “agnostic alternative” to the Google stack on one side and the Facebook stack on the other”.
He also told delegates that he was “troubled” about the debate around transparency. “[WPP’s programmatic platform] Xaxis does not disclose its inventory purchase price, but… clients know the output price is 30 per cent cheaper than you would get elsewhere. We decided to [launch Xaxis] on an opt in basis. We ripped up 2,500 media contracts, and said ‘This is how Xaxis works, you can opt in or not’, and some chose not to, largely because of transparency reasons. But no one knows how Google, Facebook and DoubleClick’s algorithms work, and in addition, they change over time. Last time I checked our margins they were 15 per cent. Google’s and Facebook’s were in the stratosphere, 40-50 per cent.”
Sorrell also expressed some frustration at not being able to compete to buy Atlas (bought by Facebook last February), Doubleclick (bought by Google in 2007 for $3.1bn) and MoPub (bought by Twitter last September for $350m). “We bought the poor man’s DoubleClick and the poor man’s Atlas [in the shape of 24/7 RealMedia, which WPP bought for $649m in 2007] and morphed it into Xaxis.”
Finally, he revealed the amount of money spent by WPP companies with Google, Facebook and others. As previously reported from IAB Engage last week, Sorrell said WPP was on track to spend $3bn with Google this year, and confirmed that Google has displaced 21st Century Fox and News Corp as WPP’s biggest media owner partner. He also reiterated the act that WPP considers Google a “frenemy”.
He went on to confirm that WPP will spend $650m with Facebook this year, compared to $439m (“from memory”) last, while Twitter will get $100m of WPP clients’ money, double what it got in 2013. To put things in context, Sorrell pointed out that the average spend with most big traditional media owners is $1bn - $1.5bn.