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Client In-housing

Founder of WPP and Founder, Executive Chairman S4 Capital

IP Interview
Published on December 27, 2020

Why is this interview interesting?

  • How advertising clients are in-housing advertising budgets and shifting spend away from agencies
Executive Bio

Sir Martin Sorrell

Founder of WPP and Founder, Executive Chairman S4 Capital

Sir Martin Sorrell is Founder and Executive Chairman of S4 Capital plc, which is building a purely digital advertising and marketing services business for global, multinational, regional, local clients and millennial-driven influencer brands. Sir Martin 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. When Sir Martin left in April 2018, WPP had a market capitalisation 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 plc for 9 years and worked for James Gulliver, Mark McCormack and Glendinning Associates before that. S4 Capital plc merged with MediaMonks, its content practice, in July 2018 and MightyHive, its programmatic practice, in December 2018 and has added eight further content programmatic and data companies to both practices in 2019 and six in 2020. It is listed on the London Stock Exchange under SFOR.L and after a little over two years, S4 Capital plc has over 2870 people in 30 countries, with a market capitalization of over $2.7 billion. Sir Martin supports a number of leading business schools and universities, including his alma maters, Harvard Business School and Cambridge University and a number of charities, including his family foundation.

Interview Transcript

How exactly are customers evolving, as ad dollars are shifting digitally?

Covid-19 has just accelerated the transformation. You see it at the consumer level, whether it be online shopping, education, healthcare, financial services and games and entertainment. You see it in media and the further demise of the traditional newsprint distribution of magazines and newspapers and the demise of traditional outdoor rather than digital. The rise of the streamers, free-to-air TV being under pressure. Then thirdly, enterprise transformation is being driven forward at a more spectacular rate. Change agents become even more and more important and we see them being given much more oxygen, within companies.

I think we’ve really seen a tremendous acceleration in the interest and, more importantly, the commitment. There has always been interest in digital transformation, but there’s been lack of commitment because people have said, why do we have to do that; we’re doing okay. Before Covid, GDP was up 2%, 3%, 4%, you grew top-line. If you’re talking 3% or 4% growth, that’s GDP and there’s nothing spectacular or difficult about that, at least in theory, although executing to even that for the traditional agencies is going to be difficult.

But you talk about 3% or 4% growth, you cut your costs and you buy back stock, so you increase your EPS by zero to five and 5% to 10%. The average life of a CEO is about five years, of an uncontrolled listed company, so that was a good legacy to leave.

What exactly are customers insourcing, between the creative and media buying side?

They’re looking at everything. If you look at the stats, with WFA, or whoever it is, it is about half to three-quarters of clients that are looking at in-housing. Because of digital’s 24/7 and always-on nature, that means that the traditional structure, the Marion Harper model if you like, the market share model, is no longer fit for purpose because it relies on a static model. You brief the agency, the agency comes back, you re-brief the agency, you go out and film. We have a studio where, if you want to produce a commercial, we can film anywhere in the world; we can instantly do it with the Epic Games, Unreal Engine technology. We have a huge advantage, nowadays, to produce things at warp speed, which are fit for purpose, in a market which is 24/7.

It is like running an election campaign without an election date. You have your competitors sending messages and, more importantly, consumer preferences, changing and developing and maturing, all the time. So you have to respond, at warp speed, in a nanosecond. Producing a commercial, in two months, just doesn’t make any sense. We can do high-quality stuff, quickly and effectively.

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