Martin Sorrell at 75: 'Create, burn, destroy and start again'
Martin Sorrell doesn't need much in the way of introduction.
And yet, over the past 21 months, the financial wizard who spent three decades building WPP into the world’s largest advertising holding company, has been busy reintroducing himself as the executive chairman of S4 capital.
Days before his 75th birthday, he joined the "Ad Lib" podcast to discuss everything from what motivates him today, why the holding company model he helped create is now an “albatross,” what the game plan is for S4 and why he bristles at the old criticism that he is not a creative person.
This interview has been condensed and edited for flow.
You have a birthday coming up.
On Valentine's Day. God's biggest mistake, yeah.
You’re turning 75. You have a very young daughter. You've left an indelible mark on advertising already. You are quite wealthy. What motivates Martin Sorrell in 2020? Why S4?
Well when I left WPP, which is two years ago almost, I didn't want to retire. I don't want to play golf. The mind seriously vegetates and the physical as well. Time takes its toll. Then the second thing was to do portfolio stuff, which I don't like. I don't like dipping in and dipping out. Being a non-executive director of a listed company is a thankless task.
So you start from scratch?
What I wanted to do at S4 was look at the WPP portfolio, which I know well because we put the bricks in the wall over 33 years. There were three elements: around data, around content and programmatic, which really is about digital transformation. At the end of the day, what S4 stands for is a new model, building a new era model.
Mark Read, who succeeded you at WPP, says they’re about digital transformation. So would a lot of the holding companies.
Well he's got the albatross around his neck hasn't he? And it'll probably choke him.
Isn’t it an albatross that you made?
No, no. It's just an albatross. It's the albatross that all legacy companies face. I mean, there's no getting away from that. That is the problem. Now the question is how do you get out of it?
We have a control share so we can't get kicked out if we make a short-term mistake. We're very focused on the long-term, which is the essential issue. Which is the problem with private equity, by the way, because the average life of a CEO in most uncontrolled listed companies is five years. So by nature, what everybody is thinking about is five years, which is too short in a world which is being transformed, forget about digital transformation. So it's very difficult to change a company. Starting with a clean sheet of paper was quite exciting.
Give a case study, an example of S4 at play, and why it is different.
Well, there's myriads of them if you're talking about on the tech side of the business, it will be our work with Google or with Facebook or with Amazon or Netflix or Uber or ServiceNow. The holding companies point to their digital transformation businesses and they think a 6 percent growth is wonderful. So we've got about a $400 million base now at S4 and it's growing at 40, 45 percent.
Are there specific examples you can give of work?
I would say the Braun work at Procter, the Gillette work at Procter. I would say some of the Mondelez work that we've done, the Nestlé and the Fanta work that we've done with Coca-Cola, and the Starbucks Nestlé work, which we're doing another iteration of that coming through. Then all the work that we do at Google. Google is, by far, our biggest client. It's what I would call a whopper for us, and we're looking at whoppertunities as we call them. We are involved in big pitches at the moment, and there are five going on at the moment, which is not what we're used to.
So you've been on a acquisition spree—
No, merger spree. You see, because there's a very important distinction. It's a philosophical distinction.
Or is it a semantic distinction?
No, no, no. It's philosophical because it says to the people, “Are you willing to join us on this journey?” It sounds a bit pretentious, but it isn't, and it's very meaningful. The first sentence of every conversation is "If you want to sell your business, we're not interested. Go and talk to one of the holding companies or the consulting companies." So they tend to be younger people. They tend to be people in their middle, late 30s early 40s. Not 50, 60. Certainly not 75. So it's a different generation.
What's your data play?
One of the other implications of the Google decision on third-party cookies is to make first-party data even more important. So our focus, actually it makes [Procter & Gamble CMO] Mark Pritchard into even more of a hero because what does he say? I think it was at the ANA, which talked about the 1.3 billion consumers that Procter had in its database and that it was developing its relationship with. Talked about what he was doing in-housing, co-location on content and the same on media. So he was validating the model that we've been developing.
P&G as a direct-to-consumer company, almost?
Well, they are all moving in that direction. All clients will be trying to build a strategy through retail and online. So Christian Dior for example, dior.com. So you're building a relationship and you're getting information online, subject to all the privacy, brand safety and electoral interference, constraints that—
And regulation coming down the pike.
We're looking at our opportunities and we've seen hordes of companies that have what they claim to be first-party data. Actually they're third-party data basically, but their access to that third-party data is going to be cut off as a result of what's happening and it's so early days we haven't really analyzed the implications of it.
Have you formulated your approach?
No, we're in the process of it. One of the things we're looking at, at the moment, which for us would be a major move, is a company which is very much in the sweet spot of what we're talking about, and it's very difficult because we don't know what's going to happen over the next two years.
You’re talking politically?
Very narrowly about third-party cookies. Then if you talk about politically, you don't know. All I know is that GDPR has not helped the small. It's entrenched the big. My view is Google, Facebook, Amazon are unstoppable. Snap has got more traction but it's one and a half billion of ad revenues. TikTok has made big inroads, but it's a Chinese company. It runs into the paranoia that America has about the rise of China.
I was going to ask about China. They are all grappling with various issues. There’s coronavirus. Hong Kong. Their slowing economic growth. So how attractive is China as an advertising market?
What geographic area is most primed for growth?
I'm very bullish on North America and South America. Whatever you think about Trump, basically, he's pro business. I'm bullish on Brazil, but big issues surrounding, for example, Argentina, Chile, which was a surprise, I guess, Mexico, but there is a bit of inflation there. There's more wiggle room for our clients and there are two other very, very important points about Latin America. Firstly, the supply, if I can put it crudely, of creative talent is huge. Creative and tech abilities.
How do you inoculate yourself against Brexit?
Actually the answer to Brexit from our point of view is what we have in Amsterdam and Hilversum. The progress that we've made and it's superb. But the Western Europe business we have to make bigger. We need Germany. That's really important.
So you're not worried about Brexit?
I am because I remain a Remainer. But look, the die is cast. We had an election, which was a quasi-referendum. The people spoke. Boris [Johnson] did a brilliant job with his ...
His great marketing?
Well it tells you two-second ads work. It's a big lesson: “Get Brexit done. Take back control.”
Let's talk about content. The conventional wisdom on you is that you were never really a creative guy.
Yeah, but that's an easy shot. That's a cheap shot. Bean counter shot, the accountant shot.
You were at the Super Bowl. You were not watching the commercials, I take it?
No. There's a lot of money spent which could be better spent. There will always be scope for your sort of tentpole campaigns, whether it be the Super Bowl or the World Cup or the Olympics. I came away from CES thinking that the new platforms, Google, Facebook, Amazon, in particular, but Tencent, Alibaba, ByteDance, they will be major players in the content rights wars. You see Amazon experimenting with the premier league. You see them experimenting with the NFL.
Live sports is what's keeping TV alive.
Any rights holder is going to decide, "Do I go long with the networks or do I go short and start to segment the rights between traditional delivery and new delivery?" You know, streaming, over the top, highlights.
Do you think it'll go to the latter?
They will be forced to. So the question is Netflix. Will it take advertising?
I was in a room at Sundance with a bunch of folks in the TV industry and I asked that question. They said absolutely not.
No, I disagree. With the exception of it being sold, what would you do when Disney's price point, Apple's price point, is so much lower and at the level it is now for Netflix it can't make it work. Now it's betting on being able to increase the number of subscribers, particularly international. So I think it will come to, do you want to have Netflix with advertising or do you want to have it without, and there'll be a different price point. Advertising will perform its age-old function of providing content at cheaper prices.
I'm interested to see what happens when people realize they're shelling out for Disney and they're shelling out for Peacock, they're shelling out for Quibi, and who survives? What are you thinking?
That's the Netflix problem. Can it continue? And it produces superb stuff.
Do you binge-watch anything?
I do actually. I'm looking at “Messiah” at the moment.
Tell me something that you haven't told a journalist before.
Cor, blimey. I've told them everything. There's nothing left to tell!
I'm curious to know what it felt like to be knighted and if it’s a meaningful honor to you?
Very meaningful for family and me. Particularly Mum and Dad who were first-generation immigrants.
John Lennon claimed that the Beatles smoked pot in the palace loo when they collected their MBEs. Any stories along those lines from you?
Not really. There is a story, but not for your pages.
Talk about Burning Man. You've been. What do you get out of it? What do you look forward to there?
Simple: Creative destruction. They create, burn, destroy and start again. There’s a real lesson there for analog companies.