WPP's Sorrell Favors Revising C3 System, Taking Media Risks

Martin-SorrellDeparting from the stand his company has taken on the issue, WPP CEO Sir Martin Sorrell said Friday that the current C3 ratings system would have to be revised.

Sorrell said it was his personal view -- he stressed that it was not the company’s -- that the networks have a “strong argument” for extending the current C3 ratings metric to a measurement that captures more days of on-demand viewing. While noting that GroupM executives believe that C3 is “sufficient for now,” Sorrell said that as viewing patterns continue to change, “the system needs to change.”

He made his comments at a breakfast presented by the Paley Media Council in New York, where he was interviewed by Thomson Reuters’ Chrystia Freeland.

Sorrell also said that in the media and marketing world, legacy companies like the TV networks, and ad firms like WPP, must be flexible and experiment in order to remain current and properly serve audiences and clients.

The $70 billion that is spent on TV ads each year is “about right” given the amount of time that audiences spend with the medium. That said, he stressed that the networks “have to be much more flexible,” given shifting viewing patterns as smaller screens begin to grow in popularity.

Recent Nielsen data in the U.S. “is not pretty” -- especially among younger age groups, who are watching in bigger numbers on the Internet, tablets and smartphones, Sorrell said.

And holding companies that don’t experiment risk disintermediation, he added. That’s why the company has invested in firms like Media Rights Capital, the production studio behind the Netflix original series "House of Cards."

“We need to be a strategic VC,” said Sorrell, noting company investments in firms including The Weinstein Co., Buddy Media and Vice.

Still, with media giants like Google, Amazon and Apple dominating the digital landscape, disintermediation remains a risk. Sorrell pointed to Google as Exhibit No. 1. Recently, the company’s sales force contacted a WPP client. “They wanted to deal directly with them and disintermediate us,” he said, despite the estimated $2.5 billion that WPP will spend with Google this year.

“Life is full of frenemies,” Sorrell said. ‘We have to work together.” For WPP, doing business today is “very difficult. It’s like being in the trenches. It’s a slow growth world with not enough demand.”  

This year, the holding company will produce record financial results, Sorrell said. But like 2012, “we’ll get there ugly,” and with help from acquisitions, a sharp eye on costs and “a currency tailwind.” Ultimately, that’s a “reflection of what our clients are seeing,” he added.

Clients are increasingly focused on finance and procurement issues. He cited the recent case of a client requesting that WPP extend the time that payment was due for services from 30 days to 120 days. “We said no, but it’s a big issue.”

The company also faces pressure from the investor sector “not to do anything” that would jeopardize what little growth is available. “The focus is on buy-backs and dividends," he said. From that perspective, he added, “the private-equity sector is more attractive.”



1 comment about "WPP's Sorrell Favors Revising C3 System, Taking Media Risks".
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  1. Paul Hollett from Light Fantastic Studios, May 13, 2013 at 11:24 a.m.

    Sir Martin is ahead of the pack in his thinking ... the ad agency world needs to rethink metrics as audience becomes more fluid across devices. Google and other digital platform giants also need to reassess and realize the marketing value agencies can bring (which admittedly can be questioned at many firms). Google makes a mediocre creative agency outside their online specialties ... and will find competing with paying clients can get costly. Disintermediation occurs when there's little value in the exchange. Agencies need to actually focus on bringing new creative branded content development to 1st and 2nd screen user experiences. Audience and money will follow ideas from the current dulled state of affairs. They are out there if you just look ...

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