Out of WPP, Sir Martin Sorrell remains bullish on India for new venture

Fresh from the announcement of his deal with Derriston Capital, Sir Martin Sorrell addressed the Indian audience for the first time after quitting as the WPP CEO, via a live video chat from London at the Zee Melt 2018 yesterday (May 30). As per media reports, Derriston would acquire Sorrell’s venture, S4 Capital. 

Sorrell noted that the advertising and marketing industry is in a state of flux today, which will provide tremendous opportunities in the industry, even if it’s of a different kind, “and that’s what we are trying to look at, at S4Capital”. 

According Sorrell, the advertising and marketing industry is a trillion dollar industry, with traditional media and communication services comprising $500 billion and the new media comprising $500 billion. 

He added that there is significant change in the industry brought about by the likes of Google, Facebook, Accenture, IBM, Deloitte and also because of the way the clients are going about their business where there is a structural and cyclical change. And this flux will bring about tremendous opportunities. 

“If you look at the $20 billion dollars inside WPP, there are parts of it that are growing and there are parts of it that are stagnant and declining. It’s a question of identifying those growth opportunities, probably in two brackets,” remarked Sorrell. 

Elaborating further, he said, “If I look at WPP today and over the last few years, India has become a pivotal economy for WPP. And it is interesting that India represents the two buckets that I am referring to. The first bracket is a geographical one – growth in terms of GDP, population and potential. India in a few years will be the most populous country in the planet and the one with the youngest profiles on the planet. The second bracket is from technological point of view. India has made huge leaps in terms of technology – from desktops to analogue to smartphones. And that represents significant opportunities due to the highly disruptive approaches seen in India. We are currently witnessing one that India is going through now and that is disruption with Amazon, Flipkart, Walmart and Alibaba. We have also seen significant disruptions in the telecom space, particularly by Mukesh Ambani’s very significant investment in this field.” 

While speaking on the network agency structure, Sorrell noted that it still had a strong hold in the industry and added that these large groups – be it WPP or Omnicom, Publicis, Havas, Dentsu, IPG – had a legacy associated with them. “When you have a legacy company, the business comes with a lot of challenges than when you start with a clean sheet. I think starting with a clean sheet is an advantage as it enables you to choose where you want to go and also choose the areas of activity without being a prisoner of history,” he added. At the same time, he said that legacy businesses had the advantage of reputation, contacts, network and a great pool of talent within the group. 

Sorrell believes that starting with a clean sheet at S4 Capital would provide the opportunity to build afresh, taking into account the changes that are taking place at the client’s end and the new structure and approach that clients want. 

While speaking on data privacy, Sorrell referred to the European Union-mandated General Data Protection Regulation (GDPR) and added that it was too early to assess the impact of such a rule. “But, from what we have seen in the case of Facebook and Cambridge Analytica, Facebook’s advertising revenues seem to be relatively un-impacted in the data breach case,” he added. 

Having said that, Sorrell noted that Google and Facebook are among the top 5 most highly valued companies in the world and if these two were put together with the 5 top Chinese companies, “you have 7 which are worth a half trillion dollars or more and Apple is the one that is threatening them.” He added, “There is immense power in those 7 companies. We all know the regulatory issues that those 7 sisters face and I think it’s almost inevitable that there will be regulatory issues surrounding those companies. Even the Chinese companies in some way shape or form their IP quite differently in terms of nature and impact, but GDPR, in its early stages, seem to favour them and we have seen the small- and medium-sized companies withdraw from the European market rather than compete.” At the same time, Sorrell stressed that with size and power came responsibility. 

Coming back to India, Sorrell praised CVL Srinivas leading WPP in India as the Country Manager. He reiterated that WPP India is a very strong force and continues to build its revenue, profitability, margins and its market share in an economy that continues to grow. 

For this, he lauded Prime Minister Narendra Modi for the significant impact he has made on the Indian economy. While he noted that the momentum has somewhat slowed due to demonetisation and the implementation of GST, the political trends and the economic background of the country will continue to improve. “I believe WPP and other companies within India will continue to grow on the back of strong economic growth and technological changes,” he affirmed. 

He ended on a positive note, stating that there was no reason to despair or be negative as there were a lot of opportunities. And added, “I would be delighted to receive CVs and ideas for S4 Capital.”