Sorrell: Big shift from legacy press to digital still to come

WPP chief executive Sir Martin Sorrell warned legacy press, such as hard copy newspapers and magazines, that his company’s ad investment in their outlets will reduce, at a breakfast in Sydney this morning.

Speaking at the Growth Faculty’s ‘Global Leadership Series’ event, Sorrell told an audience of 750 industry representatives that WPP’s media spend on legacy media was disproportionate to the amount of time people were spending consuming them.

“There are two major shifts still to come,” Sorrell said. “The two big disconnects are internet and mobile where we know people spend around a third of their time, but our client’s budgets are only 19%.”

“Legacy press – newspapers and magazines – are 19% of our budgets worldwide, but consumers spend only 9% of their time on them. Those are the two big changes that have to take place.”

WPP, the communication services giant, bought about $72b in media last year, Sorrell revealed, with $2.5b spent on its largest media owner, an unidentified, traditional media outlet. This year, the group’s spend on Google is expected to rival or even surpass this, with at least $2.3b forecast to feed into the web giant.

“Google is a five-legged stool,” Sorrell said, explaining that it is far more than just a search engine. “It’s powerful in search – 80%-90% of market share… worryingly high, that’s why I call them a ‘frenemy’. Then you have display where they’re trying to increase their penetration. Then you have YouTube and video. Then you have social – Google+. Some people poo poo Google+, but it’s strong. Last and most importantly you have mobile.”

Facebook, in comparison, benefitted from WPP to the tune of $200m last year, and should earn $400m from the firm’s coffers this year. Sorrell reinforced that the social network is a branding medium, not an advertising medium. “This is about social conversations and broadly people don’t like social conversations interrupted by commercial messages,” he said.

Commenting on mobile, Sorrell said the growth of the medium had been disappointing to date but is starting to come now that smartphones have taken off. “Google’s acquisition of Motorola mobility is the single most important catalyst to the growth of mobile and mobile advertising,” he added.

WPP’s strategy for growth will focus on new markets, new media, consumer insights and ‘horizontality’, as the company seeks to forge ahead by encouraging its various advertising, media planning, insights, communications and marketing businesses to work together.