WPP's Sorrell Calls For Pay Model For Content
WPP Group CEO Martin Sorrell said Monday he believes it is imperative that a pay model for content should dominate, since media companies need more than ad dollars to afford continued production of top-tier content. WPP, of course, needs those premium offerings to slot its ads in and around.
"Rupert Murdoch has to succeed," Sorrell said at the annual NATPE event.
Murdoch is trying to usher in a pay model for newspaper content on the Web. His News Corp. is also launching a daily newspaper with a subscription price for the iPad.
Sorrell also called for more state subsidies of journalism, which does take place outside the U.S.
"I don't think consumer-generated content is good enough to replace professional," he said.
Sorrell pushed for the "triumvirate" of agencies, clients and media owners -- which he considers increasingly "quasi-clients" -- to recognize that when one succeeds, the others do too.
"That sort of alliance has to work much more closely together," Sorrell said. "In fact, we as agencies have to treat media owners almost in exactly the same way as we treat our clients. We have to walk together with them much more closely."
WPP agencies have branded entertainment arms, but Sorrell said WPP is forming a company-wide operation involving GroupM and sports and event marketing businesses to dive further into content production.
"We are forming a programming and content division that will create -- that will produce with others and distribute ... we are going to initiate and we are going to cooperate increasingly in the content area," he said.
Sorrell discussed a range of subjects Monday that stretched into the world economy -- a favorite topic -- including the importance of the U.S. market, even as China and other emerging areas boom.
"Never underestimate the U.S.A. -- never write it off -- it's 300 million people, vast natural resources, human resources, immigrant culture, always capable of dealing -- or certainly to date, capable of dealing with economic and political challenges," he said.
On the ever-present pressure on fees that marketers want to pay agencies, Sorrell said that WPP arms generate about 9% to 11% commissions on work, if media, planning and creative are bundled.
Clients looking for a better deal is "here to stay as long as inflation is here to stay."
"It's no longer Don Draper," he added. "It's no longer 15% or 17.5% on production."
Sorrell said that holding company expansion over the last decade has been a boon to marketers -- and WPP. The media is appreciative of the little-shop-that-could stories, but "Goliath has become more powerful," Sorrell said.
Small agencies can't move swiftly into new markets. If Cuba, Iran or another unlikely country were to become an open market, a small agency would have trouble establishing a base -- not to mention the need for more business in Brazil, Russia, China, etc.