CANNES—The world’s biggest agencies are “strapped” by their structure and hesitant to experiment, while advertisers are taking back control and experimenting more than ever, according to Sir Martin Sorrell.
“It’s not in-housing, it’s part of a much broader trend,” the former CEO of WPP says in this interview with Beet.TV at the Cannes Lions International Festival of Creativity.
Sorrell is now Executive Chairman of S4 Capital, which is described as building “a new era, digital platform for global, multi-national, regional, local and millennially-driven clients.” When he looks at the six biggest agency holding companies he sees an “adapt or die” scenario.
“They have no choice. The six of them are like sort of super tankers. They’re not agile enough, they’re not fast enough, they’re not flexible enough,” Sorrell says.
He traces client retrenchment to the days when Lehman Brothers was failing and the world financial system was on a precipice. One recent example Sorrell cites is the acquisition by McDonald’s of Dynamic Yield Ltd., which specializes in in personalization and decision logic technology, as a means of “trying to take back control.”
Other advertiser concerns include platforms controlling data, “proving to be a block to the direct consumer relationship.” Agencies, meanwhile, “are worried about incumbency instead of being totally transparent and willing to experiment.”
The net result among marketers is “the propensity to experiment has risen to a level that I’ve not seen in fifty or the so years that I’ve been in the industry,” says Sorrell. “In-housing is one of the means of experimenting. We’re not just seeing it on programmatic, we’re seeing it on content creation too.”
When agencies negotiate fee structures, “The level of directs for a new company with a clean sheet of paper is totally different than an established company, a legacy company. With indirects it’s light years difference. You don’t have indirects in a startup.
“They are strapped. It’s like a straight jacket. So when the procurement people from the agency go to negotiate with the procurement people at the client, they’re locked into a structure that the client’s not willing to accept. So that’s the fundamental problem. You have to have a totally new structure.”
He references his trip last year to the Burning Man festival, which is held in the desert in Nevada, as an allegory for what agencies are facing. “It’s creative reconstruction or destruction. Every year eighty thousand people build the burning man, they build the temple and they burn it down at the end of the week and they start again.”
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