S4 Capital's Martin Sorrell predicts holding companies will break up
On yet another Advertising Week New York panel S4 Capital Executive Chairman Martin Sorrell graced with his presence, the former longtime CEO and founder of WPP said he predicts the holding companies will eventually be “broken up” and consolidated.
Sorrell was joined on stage Wednesday by S4 Capital’s MediaMonks Founder and Chief Operating Officer Wesley ter Haar and MightyHive President of the Americas Emily Del Greco.
“The proof of that is IPG, which appears to be the best performer" of the holding companies, Sorrell said. “Inside IPG, McCann is 75 percent, or whatever it is, of the business, and it’s one integrated business. That’s the key.”
He said WPP is now “trying to play catch up” in its failure to consolidate sooner (with the mergers of VML and Y&R and Wunderman and J. Walter Thompson).
Sorrell claimed that the primary issue holding companies are struggling with is that the majority of their revenue is generated by "legacy" media and creative advertising, which is shrinking.
“Any [holding company] that wins the traditional media pitches, I would short their stock,” Sorrell said. “We are purely digital. That’s the only thing we’re interested in.”
To illustrate his point, Sorrell said S4 Capital is “not a holding company … we’re the antichrist.”
Sorrell noted how S4 Capital, with MightyHive and MediaMonks, does not shy away from what he called "phobias" of traditional agencies: partnering with the tech giants like Google and Facebook (which he once called “frenemies” of the industry) and working with in-house teams. Netflix’s is one major in-house unit the company works with.
He said agencies have this fear of letting anyone talk to their clients, but said “Facebook and Google are not trying to steal" them. Haar said his team creates 1.7-second ads for social (which can be adjusted in real-time based on performance results) because Facebook has discovered the average person does not spend more than 1.7 seconds looking at a post.
“We’re trying to change the way the industry operates in a world that’s changed,” Sorrell said.