Sir Martin Sorrell says the holding companies will survive, but there will be more consolidation

The agency holding companies will survive, but there will be more consolidation, according to Sir Martin Sorrell.
The former head of WPP said its recent mergers spell the "death" of the Y&R and J. Walter Thompson brands and that the Y&R name should have come first in the merged company.
He said that with his new company, S4, he's not concerned with competitors but whether he can meet clients' data-related needs.

Since Sir Martin Sorrell's sudden departure as chief of WPP earlier this year, he set up S4 Capital to create a global advertising, marketing and ad tech company by acquisition. That was followed by two big deals — MightyHive and MediaMonks.

Business Insider caught up with Sorrell offstage at its IGNITION Conference in New York in December, where he weighed in on the agency holding company model, WPP, and advertising measurement. Our interview has been edited and condensed.

Tanya Dua: With MediaMonks and MightyHive, S4 seems to have the programmatic and digital production side of the equation figured out. What's next?

Sir Martin Sorrell: We almost have the complete train set, probably about, three-quarters to seven-eighths of the set. I'd like to see a little bit more in content and a little bit more in first-party data. But it's difficult to find good assets, and they're expensive. On the data side, there's stuff that I really like, but pricing is hard. When IPG bought Acxiom, they seemed to leave behind the best asset [LiveRamp], and I wonder why that was.

Dua: The agency holding companies are making huge changes as well. Will that model as we know it survive?

Sorrell: They'll survive, but there will be more consolidation. I can't remember a time when it's been more revolutionary.

Dua: What is your opinion on the VMLY&R and Wunderman-J. Walter Thompson mergers at WPP?

Sorrell: VMLY&R was something that I initiated. [VMLY&R CEO] Jon Cook and I fully agreed that it was going to happen. We were going to put Geometry into it as well. But I think it was a mistake for Jon not to have been more magnanimous. He would have done himself and his people at VML a lot of good by calling it Y&RVML.

I can understand the idea of making it digital-first by implication, so you put Wunderman before Thompson and VML before Y&R, but it means the death of the Y&R and Thompson brand. I was in Argentina when it was announced, and Y&R and JWT in Argentina mean something.

These decisions are difficult to make, but when you make them, you have to blend them in. You have to go out and talk to the troops and explain why you're doing it, because if you don't, you will lose their hearts and minds.

Dua: Do these moves signal the death of creative agencies? You don't seem to be shopping for creative assets for S4.

Sorrell: You're living in the 19th century if you define creativity like Don Draper. The definition of creativity is shifting. Believe it or not, data analysts can be creative. People who do digital can be creative. Data doesn't destroy creativity, but enhances it, informs it and makes it more effective.

Dua: So who is S4 competing with? The consulting firms?

Sorrell: I don't worry too much about the industry. What I worry about is what does S4 deliver in terms of data, driving content and driving media planning, buying or programmatic. Several clients have said to me that is their model. They have their first-party data at the core, and that drives what they do from a content point of view and what they do on the media planning and buying side.

The acid test of S4 will be whether the combination works effectively and has correctly analyzed what clients want. The mantra — it's a terrible mantra in many respects — is doing it faster, better, cheaper, and more efficiently.

Dua: You've said before that measurement needs to be improved. Some advertising executives have gone over to the measurement side recently. What are your thoughts on that?

Sorrell: Comscore is a tragedy. We invested in Comscore when I was at WPP, and they had a massive opportunity. I was really disappointed with the way that was handled. I'm just as hopeful now as I was before. With Nielsen, I think [new CEO] David Kenny will make a difference. It's too early to tell. But there's a big opportunity there.

Dua: Has Amazon started to challenge Google and Facebook's dominance?

Sorrell: In terms of market cap, it has already. In terms of advertising, Amazon has a long way to [go], but it will challenge on advertising and search. 55% of product searches in the US, according to Kantar, are delivered or initiated through Amazon. Those are the three, the troika, if you ignore the Eastern challenge, which includes Tencent and Alibaba.

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