Martin Sorrell on Challenging the Ad Industry Giants He Helped Create

S4 Capital executive chairman discusses in-housing, zero-based budgeting and reining in Big Tech

Martin Sorrell sitting in a chair in a library in front of a bookcase, a large open book and a fireplace.
Brainpower is more and more important in the digital media marketplaces, Sorrell says.
Sasha Maslov for Adweek

In an industry built on creativity, it’s a testament to both his longevity and ingenuity as a shrewd businessman and negotiator that Martin Sorrell, the former chief executive of WPP, has become synonymous with advertising. And while much has changed over the three decades since Sorrell turned a wire shopping-basket company into an advertising behemoth, after a little more than a year into his new stint as executive chairman of S4 Capital, he’s proving that you can indeed teach an old dog new tricks.

Sasha Maslov for Adweek

Ahead of his keynote appearance at Adweek’s NexTech conference program on July 24, the 74-year-old Englishman—honored in his homeland with a 2000 knighthood and a staunch Brexit “remainer”—sat down to discuss how media power dynamics in the digital age have rejiggered spend negotiations, the problems with zero-based budgeting and how in-housing is akin to a “marketing Brexit.” 

Adweek: What issues do the larger agency networks face at the moment?
Martin Sorrell: If you look at the travails of the big traditional agencies, they can’t shift their model; they can’t get out of their [own] way. Another problem, I think, is what I call management by spreadsheet. We’re seeing a number of the holding companies making sort of centralized decisions which ignore the realities of the business at a local level.

I’ll give you a direct example: Putting the healthcare businesses back into the individual agencies is suicide. That’s going to be $600 million of revenue that will disappear because they’ll get lost in the verticals and the agencies. These are different types of businesses with people running them, and you compound the error by putting them into a Wunderman or JW Thompson, which is wrestling with other issues as well.

How significant are consultancies now in media?
They are a potent force at senior levels in the organization. I always remember the day that Kraft-Heinz bid unsuccessfully for Unilever. I was in Unilever House talking to [CMO] Keith Weed about how we could help implement Accenture’s €1 billion zero-based budgeting (ZBB) program. The net result was to encourage Unilever to have another €1 billion ZBB program. But, you know, this is the environment in which we’re living. So what we have to do is to work with our clients to be more efficient. But the consultancies get in at a C level and effectively sold them efficiency on that ZBB program.

Video/Editor: Nick Gardner

Has the emergence of digital and international media owners skewed the power dynamic in spend negotiations, compared to the ’80s and ’90s, when media buyers would negotiate trading deals with media owners on a national level and scale was more weighted in their favor?
In the old days, scale—in terms of spend—was critically important, but it’s not so important now. I think what is more and more important in the digital media marketplaces is brainpower. It’s about being able to take the data, analyze it, then coming up with the right content and distributing it most effectively. And it’s a continuous loop, and that’s why agility is so much more important.

Facebook and Google have scale and brainpower. And data. You famously termed the likes of Facebook and Google “frenemies” in the past. What makes you think they are friendlier now than before?
They are friendlier frenemies than they were beforehand. … It might be because they’ve matured. It may be the cause of more regulation or the threat of more regulation. What’s happened over the last three or four years have been concerns around brand safety, privacy and interference in elections, which has put tremendous pressure on them. It was a seminal moment when Apple and Amazon crossed a trillion [dollars in market cap]. … I remember Lloyd Blankfein of Goldman Sachs [saying] no nation state would ever let a company get to [a] $2 trillion [market cap] because it signals too great a concentration of power.

This story first appeared in the July 22, 2019, issue of Adweek magazine. Click here to subscribe.