Sorrell on newspapers, the licence fee and punching people
Speaking at a Broadcasting Press Guild event, the WPP boss gave his two cents on a range of subjects – from the plight of newspapers and the future of the BBC, to Jeremy Clarkson’s fisticuffs.
Sir Martin Sorrell, chief executive of WPP, has always been worth listening to. After all, he commands a standing army of around 180,000, including associate companies, and is familiar with no less than $75 billion in annual billings.
Apart from his restless travel around the world, the reason the 70-year-old executive is worth his weight in gold – many times over actually – is the fact that he so closely follows how the media money is actually being spent.
While others merely speculate, trends can be spotted rather quickly in the obsessive world of Sir Martin.
And when he changes his opinion on something central to the future of the media it really is like tectonic plates moving in an unexpected way.
For years Sir Martin has been rather predictably negative on the fate of the traditional newspaper as he charted the well-known declines in circulation and advertising revenue.
He was more than negative, almost rude, about what he saw as the folly of giving away the work of hundreds of experienced journalists online, essentially for free, or modest advertising returns. He saw it as the economics of the mad house.
The WPP chief executive is unlikely to have changed his mind on generous online newspaper pricing models.
But he has started to change his mind on the power of print itself.
Sir Martin told a Broadcasting Press Guild breakfast that “maybe [newspapers] are more effective than people give them credit for.”
Asked later if had changed his mind to an extent and he conceded that he had, in the face of recent research emphasising the higher dwell time achieved by newspapers and magazines compared with online, the greater sense of engagement involved and better retention of what had been read compared with screen-based browsing.
It was scarcely a dramatic conversion but a very interesting nudge on the tiller and a long way removed from the certainties of the “print is dead” merchants.
It was also accompanied by an increased level of scepticism about what digital advertising actually offers as opposed to the promise.
It did not amount to a re-assessment, Sir Martin explained, but it certainly was an assessment.
When online advertising was new and sexy there was hardly a marketing director worth his salt who did not want to devote 10 per cent or even 15 per cent of their marketing budget to the new revolutionary method of reaching an audience.
When it was 20 per cent of even 25 per cent and rising those responsible for procurement wanted a more robust approach and greater certainty on what they were getting for their money. With the world economy only growing between 3 to 3.5 per cent in real terms the pressure was on.
Sir Martin said WPP companies were doing detailed work on what should constitute an online viewing and for how long this should last in order to be counted.
The WPP executive did not mention current standards, but seeing half a screen for an uninterrupted second sometimes gets counted as a viewing.
At the same time Sir Martin acknowledged the power of free-to–air television to assemble enormous audiences, particularly in areas such as sport, although increasingly people would watch that content on a variety of screens.
He expected television to hold onto its current 40 per cent of worldwide advertising revenue although it would be spread over more screens in future.
The WPP executive also insisted that subsidiaries such as Group M Entertainment would increase its investments worldwide in television programme making.
The commissioning broadcaster always retained full editorial control, Sir Martin insisted. Apart from being able to have a say in some of the advertising time around such programmes for WPP clients, the main motive apart from accumulating intellectual property was ensuring that channels had high quality programmes to show.
The advertising and marketing services company has just taken a small $400,000 stake in a Swedish OTT company called Flownet.
“We are experimenting to see how things turn out,” Sir Martin explained.
He denied, however, that investment in content made him a media owner.
At the breakfast Sir Martin was encouraged to speculate on the future of the BBC and suggested, tentatively, that perhaps the licence fee funding mechanism should perhaps change over time.
While the BBC was “a fine institution” a lot of people could build great online and offline brands if given £3.5 billion on 1 January every year.
“Clearly it’s an approach which is immensely advantaged and maybe it should change over time,” Sir Martin said.
The WPP executive, who recently received shares worth £36 million before tax as part of a WPP top executive incentive scheme, said that giving other broadcaster part of the BBC licence fee to make programmes might be one of the alternatives to be considered by any review or inquiry.
Sir Martin was also asked what would happen if a very senior and valuable WPP executive were to thump a more junior colleague.
“He would go,” Sir Martin said without a second’s hesitation.
He was speaking just before the BBC formally announced that the contract of Top Gear presenter Jeremy Clarkson would not be renewed.
But at least so far as Sir Martin Sorrell is concerned Jeremy Clarkson should not stay unemployed for long.
“He has a tremendous following,” noted the advertising executive and someone will come in for him whether it is Netflix, ITV or Sky, perhaps “with a clause in his contract that attempts to deal with the issue.”
And then he is off to Boston to talk to students after a weekend spent in China.