Sorrell Avoids 24/7 Real Media Question at Conference

WPP Chief Exec Focuses on New Media, Globalization -- but Not Rumored Deal

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PALO ALTO, Calif. (AdAge.com) -- WPP Group Chief Executive Martin Sorrell was the keynote speaker at a Silicon Valley entrepreneur conference today and talked about everything except what many in audience really wanted to hear: his rumored deal for 24/7Real Media.
WPP Group Chief Executive Martin Sorrell is a fan of live events, but not of answering journalists' questions.
WPP Group Chief Executive Martin Sorrell is a fan of live events, but not of answering journalists' questions.

Moderator Theresia Gouw Ranzetta of conference sponsor Accel Partners gave Mr. Sorrell an easy out during a question-and-answer session after the keynote. But when a reporter asked afterward about the deal for 24/7 Real Media, a third-party ad-serving network, he responded: "It's not your business." The New York Post today reported the possible purchase of 24/7 Real Media by WPP for more than $600 million.

Big believer in events
Instead, Mr. Sorrell highlighted in his speech a feeling among his clients of rebellion against the high cost of traditional media, particularly in light of its declining audience.

"Clients are experimenting because they are sick and tired of media escalating faster than the general price of inflation," he said.

He added, however, that he is a strong believer in live events such as the Super Bowl, World Cup or Academy Awards and expected their pricing to remain strong because there are few events that bring mass audiences together.

His goal is to shift a considerable portion of WPP's revenue from traditional advertising to new media, research and measurement.

Google, Mr. Sorrell noted, has revenue of $11 billion, but a market capitalization of $150 billion. The top four marketing holding companies have combined revenue three times that of Google, or $33 billion. But their combined market cap is only $50 billion by comparison, he said, calling it "the problem for us."

Friends for now
But he said Google has a "big challenge" in trying to capture top-tier marketers such as Unilever, Kraft and Nestle. When asked whether Google was a friend or foe, Mr. Sorrell said Google wants to be friends in the short term to gain access to WPP clients, but will be an enemy in the long run.

Among the things he urged the audience to think about was globalization, particularly the growing influence of India and China. "The balance of power has shifted not just technologically but geographically," he said. For example, China Mobile has 300 million customers; overall, China has 468 million mobile subscribers.

Another concern of Mr. Sorrell is distribution, with Wal-Mart, Tesco and other retail chains grabbing power, he said, and upsetting the "balance between production and distribution."
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