Sir Martin Sorrell And Ad Age On The Coronavirus Advertising Market

Yikes. So much to listen to and watch. A couple of days ago I watched an Ad Age interview by Senior Editor Jeanine Poggi and Sir Martin Sorrell. Sorrell was an early player at Saatchi & Saatchi, the founder of WPP and now runs S4 Capital. S4 is his new “agency”  The strapline = “A Communications Business For The New Marketing Age”.

Need to hear from a smarter dude…. FAHGETABOUTIT.

Let’s start with a quote. Read on past this. But, start here. Do you ask clients to spend more during a “recession”? from Sir Martin:

Well listen, the traditional agency response is spend, spend, spend, you know?

They quote statistics. I think my former colleagues are quoting a statistic, 84% of consumers will be watching carefully or will appreciate those companies that behave well during… Well look, everybody’s going to behave well. Everybody right-mindedly will behave well. But it’s going to be a good thing to spend, spend, spend.

That’s nonsense.

The Ad Age interview is a 45-minute video and you can see it at the bottom. I had the key bits transcribed and include what I think are the important points from the perspective of an industry leader – in today’s ad market. Read on, especially about the critical to most agencies – question…

“What should you say to clients about their coronavirus advertising budget?”

Here you go. Note that I edited the interview for brevity and clarity.

 Sir Martin Sorrell On The 2020 Market

Martin Sorrell:

Generally, it will be very difficult in Q2. I think we’ll see a recovery from lower levels in Q3, and then into Q4 it’ll get better. As we go into 2021 I think things will get better. There are things that will knock us off course, but I think generally…

On Digital

Martin Sorrell:

And S4  is a purely digital business. We’re totally focused on that holy trinity of first-party data, digital lab recognizing content, and programmatic, and we’re in the sweet spot.

I mean what we are seeing at the moment, even with the cuts in advertising budgets, shifts in money into digital.

And the digital platforms, the six big ones, Google, Facebook, Amazon, Tencent, Alibaba and TicTok, are in my view going to get stronger and stronger. They may have some problems around small businesses because that’s the part of the economy that’s going to be hardest hit by these in the liquidity issues. But once we get through Q2 and Q3, those platforms are going to be even stronger in the future, driven by data as well.

I mean, the first-party data is going to become more important, and third party cookies have been nixed or will be nixed over the next two years by Google.

On Advertising Spending Now – Do It? Or, Nonsense?

Jeanine Poggi:

And I have a question from Toby Jarvis on Facebook: How are you persuading your clients to continue advertising, especially since people are watching TV and online more than ever? And I want to add to that question, should advertisers keep advertising during this time? Should marketers still be advertising right now?

Martin Sorrell:

Well listen, the traditional agency response is spend, spend, spend, you know?

They quote statistics. I think my former colleagues are quoting a statistic, 84% of consumers will be watching carefully or will appreciate those companies that behave well during… Well look, everybody’s going to behave well. Everybody right-mindedly will behave well. But it’s going to be a good thing to spend, spend, spend.

That’s nonsense.

When companies are facing existential crises in Q2, when they are not sure that they will have enough money to survive, it’s ridiculous, and I would put it as strongly as that, to say “spend, spend, spend.” That’s nonsense.

It’s right to say that, for example, the tech companies who have budgets that were built around say sporting events around Tokyo 2020, or Euro 2020, or the Premier League… they should divert that spending to doing good to the purpose-driven campaigns.

On Altruistic Advertising

Martin Sorrell:

But those campaigns should be of highly practical altruistic purpose. They should be focused on equipment, on vaccine development, on therapy development, on supporting those on the front line in the NHS in the UK, or doctors or nurses, or whatever to be. It shouldn’t be self-serving.

And I think to suggest that spend, spend, spending is the answer, is really ridiculous. So the answer to this question, I think, is that you have to encourage clients to deploy their resources more effectively in the way that I outlined.

The tech companies up until now have held their budgets in our experience, some actually… Amazon hits a new high on the stock exchange, Netflix, it’s a new high. We are seeing budgets being expanded with those companies that have been positively affected. Obviously, travel and tourism would be the other end of the spectrum, but the tech companies have diverted money from those sporting events that I mentioned, for example, to doing good and purpose campaigns. We’re also starting to see some postponement, I think, by tech companies from half one into half two, because they count spend all that money, all those budgets, and they’re seeing some pressure on their own advertising revenues as the SMBs come under pressure. I think we’ll see that in the platform results as we get into them in Q2, as they report on Q1 and talk about Q2 and beyond. We’ll see the SMBs are being put under extreme pressure.

On What’s Next? TV? Nah.

Martin Sorrell:

So I think what we’re saying to clients is, “Understand that you may have to cut. But, move money into digital because that’s more effective.”

I think we’re seeing a heavy increase in streaming, not just at Netflix, but at the competitors like a Disney+, you see the Disney+ subscription figures, which are huge. Must be one of the most successful new product launches for a long period of time.

All these streaming devices will put pressure on linear TV, along with the switch to digital. And I think that’s the… Not used to be the $64,000 question, as to what is going to happen to linear TV. I think we see continued compression there, and not quite as high.

I remember I did a session at CES with Bill Konigsberg of Horizon, who runs the most successful independent media agency in America. It’s number three in the market after Publicist and Omnicom.

I remember him saying at CES that he thought some of the dayparts would be down by 45%, and that was before C-19.

I think there will be continued pressure on linear TV, and again, is it going to be as bad as what happened to newspapers and magazines? No. It will be better than that, but I think there will be continued pressure of some significant degree.

On The Big Digital Shift

Martin Sorrell:

So there is this change that we’re seeing, and just to amplify a little bit, as we come out of this, as we come into Q4 and 2021, three things are going to happen.

Consumers are going to switch even faster to digital.

They will learn to educate their kids, buy online, communicate with one another on social on video, whatever it happens to be, during C-19.

And we’re going to see media owners switch to digital even faster as well.

The Ad Age Interview

Got 45 minutes? Here you go. Oh, LOL, tell me what the “Maltese Falcon” looking thing is on Sorrel’s left.

So, what are you telling your clients to spend? And, on what?