Frankly: Martin Sorrell predicts end of big media holdings, says model no longer works
LONDON: One of the world’s most prominent figures in the advertising industry has warned of the end of the media holding company model, which has dominated for decades.
In an interview with Arab News, Sir Martin Sorrell also pointed out that the Middle Eastern affiliates of these groups were far from exempt.
“Well, there are four (five) major holding companies, which I think actually dominate in a Middle Eastern context, the market, at least currently. I don’t think that will be the case in the future,” he told “Frankly Speaking” presenter Katie Jensen.
“It would be IPG, it would be Omnicom. This would probably include Dentsu, as well as WPP and Publicis.
Sorrell is reputed to be one of the founders of advertising giant WPP, and under him many believe he lived his peak. He served as the company’s longest-serving CEO from 1985 to 2018 before leaving abruptly due to misconduct allegations.
When asked if his anti-holding comments were specifically aimed at WPP and if it was a personal vendetta, he replied that you just have to look at their numbers.
“I think you just have to look at the facts,” he said. “Just look at the performance of the stock market relative to indices. And in fact, it’s clear to everyone if you look at the performances of the last four or five years.”
As to why the media holding companies wouldn’t perform, he said the reason was that the market was “somewhat wary of the long-term structural performance of their models.”
“I think what the stock market is signaling in relation to holding companies is a general mistrust, a structural mistrust of their sustainability.”
Currently, these groups operated with several large subsidiaries which, according to Sorrell, “do not work well together”.
“They made them more complicated because they’re more vertical and the verticals don’t work together to solve customer problems or to provide solutions to customers,” he added. “From a personal point of view, I think a dissolution of these companies will probably be the best answer.”
Sorrell currently runs S4 Capital, a new-age digital advertising agency based in London, and recently opened an office in Saudi Arabia where he serves major clients such as NEOM and Qiddiya.
“The breadth of the resources and the commitment are so important, and the quality of the resources are so important, that I think they will be successful in the long run,” Sorrell said of Saudi Arabia’s reform push. as it continues with Crown Prince Mohammed bin Salman’s Vision 2030.
“So I think it’s about educating the world about the nature of projects, the nature of ambition.”
Sorrell reiterated what he said in an Arab News interview in 2021 that he believed Riyadh would be the region’s next advertising capital, a title that changed hands from Beirut to Dubai before finally end in the Kingdom.
Sorrell is a firm believer in growing local talent, instead of relying on imported expats, and he said he tries to achieve this in his Saudi operations.
“We need to develop national talent. But, of course, given the envisaged rate of development and the very ambitious goals that the government wants to achieve, it probably has to be a mix,” he said.
“We are putting in place a judicious mix of talent from outside the region and from within the region.