Sorrell praises rivals, calls out the AI hype, and admits S4 shortcomings
S4 Capital boss Martin Sorrell might not be the industry titan he once was, but he still has an interesting take on the business of advertising and was refreshingly happy to share his opinions with the Australia-based podcast, Mi3.
He praised his former holding company rivals, dissected what needs to improve at S4 Capital, and said agencies should stop pretending the world is more complicated than it is. We also discovered, thanks to Mi3 host Paul McIntyre, that Sorrell has been wearing a YouTube bomber jacket and has a bolthole in Uruguay.
Maurice Lévy: Sorrell spent much of his time at the top of WPP locked in rivalry with Publicis Groupe’s then leader, Maurice Levy. Now he can’t speak highly enough of him, saying how well he handled the succession of Arthur Sadoun and praising the clear organisational structure that Lévy has built, thanks in part to his “tech bent”, evidenced by his firs Publicis role (in 1971) as information technology officer.
Holding companies: Former WPP CEO Sorrell is “amazed” that no one has made a play for WPP, given that the media operation is worth at least $5.7bn. He’s expecting some activity in the market, possibly from private equity, once the interest rates come down.
S4 Capital: “I have to take responsibility… We have not been running it as well as we should be… we give things away too easily for free.”
The theory of S4’s structure (where instead of the usual acquisition and earnout model, S4 Capital does 50% share and 50% capital deals) was that people would be motivated to focus not just on the top line but on the bottom line too. However, Sorrell admits “It didn’t play out that way” because a lot of the founders continue to run their businesses as if they were still smaller companies. He said: “Good people tend to put their arms around things, but exceptional people are good sharers – they are the jewels but to be frank there aren’t as many as there should be.”
AI: There’s still a lot of hype around AI, but it represents “significant transformational change”, particularly personalisation at scale: “I’ve rarely if ever seen a technique so effective and interesting in terms of content marketing and the way you engage with consumers.”
AI is messing with the agency business model. When you are paid on the basis of time, there’s less incentive to adopt AI, so “We have to move to an asset-based model”.
Creativity: The tremendous increase in the amount of personalisation at scale is creating an “intense barrage” of content that may “overpower” the consumer. Because of this, the need for creativity is only going to get greater: “These are tools that will make creativity more important, not less important.”
Agencies: “Agencies love to say the world is getting more complex, because that way they have more leverage with clients and partners. I think it’s getting simpler… Basically the channels we deal with are pretty clear.”
