Speed, quality & value are our core mantras: Sir Martin Sorrell
In India yet again, Sir Martin Sorrell and his S4 Capital have aggressive plans for the country. At a meet in Mumbai yesterday (November 21, 2019), S4 Capital announced their growth plans and India strategy. Along with Sorrell, also present at the event were Victor Knaap, Founder, MediaMonks; Kenny Griffiths, Managing Director – APAC, MightyHive; Poran Malani, Director of India Operations, S4 Capital; and Smita Salgaonkar, Country Head – India, MightyHive.
Sorrell made it clear that they are going for the digital business only and will not do traditional. “If a company does 60 per cent digital, then we are going for that 60 per cent,” he said.
Adding further, Sorrell said, “Digital accounts for about 40 per cent of the $400 billion global business. It is forecasted to reach 50 per cent by 2021. Eventually, it is going to be 100 per cent or close to that and agencies are going to have to pivot. That might be around Voice, VR, AI or whatever it is, but there is enough runway for us as a purely digital focused company.”
MediaMonks and MightyHive are already working with clients such as Google, Apple, Adidas, Starbucks, Nestle, Johnson & Johnson, Netflix and Heineken in the global arena. MightyHive has already begun working with several Indian clients in tech, pharma, and packaged goods categories.
“Digital is growing at about 20 per cent globally, while traditional is growing at 3-7 per cent,” noted Sorrell, adding, “That’s where the growth is and that is where we are.”
Sorrell stated that clients were already on board for a purely digital strategy. He recounted the example of Desperados, a Tequila infused Beer, that is a sub brand of Heineken. MediaMonks is handling the content practice for Desperados in the US. The brand is built on a digital-first strategy and is the fastest growing brand under Heineken’s portfolio. It is nearing $1 billion in revenue, said Sorrell, solely on the back of digital and the margins were much higher because of the efficiency in media spending.
“We have one big whopper in terms of revenue strategy,” hinted Sorrell, which is a key aspect when they pitch to clients.
Another strength of S4 Capital company is the way they are structured, stated Sorrell. He recounted a story where an agency was briefed by a client and asked to return in 2-3 months for a pitch, but they weren’t able to make it because the creative chief’s family member had passed away. Sorrell remarked, “While that is a perfectly legitimate reason, in the real world you can’t operate that way because an agency business doesn’t have one creative chief, it has 10!”
He added, “Our model is intricate. The fixed model doesn’t work anymore, you have to be present 24/7 in real time.”
According to Sorrell, while many CEOs are enthusiastic about building a business on digital, they did have one concern. As he puts it, “CEOs are concerned about digital companies like Google, Facebook, Amazon being the player and the referee. The judge and jury.”
As it stands, Google and Facebook control 70 per cent of the digital advertising business globally and Amazon accounts for 50 per cent of e-commerce business in the US.
Sorrell stressed that transparency is fundamental to a digital business. Clients are worried about the sophistication of the digital supply chain and they wonder where they money goes, he said. Every dollar that is injected into the system, and what is being extracted in the chain between the client, media and tech companies needs to be accounted for.
This is why CEOs are not keen on jumping right on the digital bandwagon. He remarked, the way companies are structured, especially in the UK, it is difficult to take the long-term view. He opined that since the average life of a CEO in the west is 5 years, they are risk averse and slow to change.
But the truth is, he adds “there are digitally-led companies and digitally-led brands.”
Commenting on which regions he would invest in, if given $100 million, he replied, “40 per cent in North America, 40 per cent on Asia and 20 per cent on the EMEA skewed towards Africa.”
When questioned what he would say if he had 5 minutes to pitch a client, Sorrell responded, “I wouldn’t need 5 minutes, just 3 words would do – speed, quality and value.”
But couldn’t other agencies promise the same? To which Sorrell responded, “They could, but the question is could they deliver?”