Ad Industry Needs to Get Used to Low Growth Being ‘the New Normal,’ Martin Sorrell Says

Low inflation, disruption are pushing clients to focus on cost

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In a wide-ranging discussion that touched on the macro forces shaping modern advertising, the implications of Britain leaving the European Union and his own compensation, WPP chief executive Sir Martin Sorrell wrapped the end of the first day of Advertising Week Europe on a somber note.

Comparing the high-flying, talent-driven Don Draper era to "the new normal," Sorrell said, "life is difficult, it's a low-growth environment."

Sorrell said the twin forces of low growth and low inflation are forcing clients to train their focus on containing cost, rather than spending more freely on marketing. Additionally, Sorrell said disruptions ranging from new entrants like Uber and Airbnb to activist investors like Nelson Peltz are shaking traditional structures and causing a general sense of marketplace trepidation.

But Sorrell also cautioned not to lose all optimism, saying investing in brands and in certain countries and pockets of the industry can still yield opportunity.

"Companies that invest in brands will win," Sorrell said. "There is a strong ray of hope there, but the world economy is in a low-growth syndrome."

Interviewed on stage by Sky News business presenter Ian King, Sorrell's forward view is to move legacy media assets into digital as fast as possible and make existing digital holdings go faster still. Secondly, he extolled the virtues of investing in companies that disintermediate the status quo, pointing to WPP's positions with Vice Media and Refinery29 as examples.

As for WPP's priorities, Sorrell pointed to tech, data and content as the three pillars of the business going forward as well as reconciling the disconnect— referencing research by Kleiner Perkins' partner Mary Meeker—between the time spent and investment in certain media like newspapers and magazines (waning time spent and high investment) and mobile (exploding time spent and puny investment).

"The small screen is not a screen that agencies have become comfortable (with)" in terms of targeting and creative, he said.

The interview briefly turned into the American Presidential race, with Sorrell predicting a significant win for Hillary Clinton over either Donald Trump or Ted Cruz.

And finally, queried by King about his reported $100 million compensation package— which caused some waves when The Guardian reported that figure in March—Sorrell looked back at his career, noting the hard work and financial risk he personally exposed himself to in building WPP (originally Wire and Plastic Products) into a company with reported 2014 revenues of more than $18 billion is ample justification for his pay check.

"I liked to build things," he said.

@jcoopernyc James Cooper is editorial director of Adweek.