In Conversation with Sir Martin Sorrell, Executive Chairman, S4 Capital
Geographically, China and India are going to be growth economies. India will grow quickly once we are out of the pandemic situation. So, I am very bullish and I am a raging bull on India.
Sir Martin, has COVID-19 been a time of profound change for you personally? How are you managing people within and across your companies at this time?
It has been a profound change for everybody, especially since I am talking to an Indian audience, we are more than a year into the pandemic. A year and a quarter and it’s still having a profound effect particularly in countries such as India. We see its effect in South America, and parts of the Asia Pacific. In Tokyo and Japan, it would impact the Olympics if it happens. The pandemic has had a major effect on the way of life – personally, professionally, family-wise.
From a business point of view, given the fact that S4 is purely a digital operation, i.e. digital through and through, we are in an age that is stimulated and escalated by digital transformation especially at the consumer level, because consumers are educating their kids online, they are taking financial services online, ordering essentials and groceries. In America, nearly 30% of the population ordered essentials and groceries online so it is impacting consumers, it’s impacted the media as you know. There is a demise of the traditional billboard and the rise of digital billboards and this is a trend too.
Finally, enterprise companies have accelerated their digital transformation, because in Q2 particularly last year blew a hole in their balance sheets, and they decided to accelerate their digital transformation. I don’t think it’s created new stuff but it’s accelerated old stuff. And also, the way we live and work. We work from home and we have a hybrid model, probably in our case 3 days in the office and 2 days out. More varied working and commuting patterns, living patterns, some people in America will move to lower-tax states and less dense towns and cities, and that may reduce or change patterns of salaries and payments. There may be much less travelling and would mean that my travelling pattern would have fewer trips.
In your opinion, do you think remote working is conducive to creativity, this often requires a high collaboration, high touch environments. How do we get teams to remain creative while working remotely?
There’s a lot of discussion about this, and there is a lot of debate about proximity. We see within the investment banking world that people have to be back in the office by June. I am 76 years, and there’s a bit of a control phenomenon here. We have a need to see people and what they are doing. If they are not in the office, they may not be doing what you want and we think that their productivity is low. But I don’t think this is the case, we can measure productivity effectively through technology, and I don’t think our productivity has changed dramatically since COVID-19 kicked in a year or so ago. And what we lose through people being at home and the work-life balance.
A bit of it is also about control, like in the old approach system, if you had people sitting in the office and you see what they are doing, then in some way you have more control over them and I think that is a phenomenon of my generation than the ‘gen Z.’ The hybrid model of working is more likely to gain traction particularly in the short to the medium term, that’s what we will be doing. Maybe in the longer term. When you are in a high office building with lots of elevators, we are going to be at a disadvantage, and COVID is going to be with us and we are going to have to take measures whether it is testing.
Recently, Eric Yuan, CEO, Zoom said that he had suffered from Zoom Fatigue having had to take up to 19 Zoom calls in a day – Have you had a similar experience? Do you long for the good ol’ days of being able to catch up over a cup of coffee or a pint?
Yes and no, it is extremely efficient. Today, we have been on an investment conference and it’s been every 40minutes, not even with a 10-minute gap, because you always overlap and it has been pretty fatiguing, but it is amazing to see what you can do with the technology. To answer your question about creativity, we see a switch to robotics and to robotic production, to animation and a shift of live events to online events, and we also saw that in our content business, it pivoted very rapidly and effectively. So, there are ways of using technology so zoom technology or Microsoft will all develop in much more sophisticated ways. I remember discussing whether zoom reduces creativity or creative differences and we found ways to use technology in highly creative ways. All is not lost, human contact is important and we are talking about re-designing our office spaces, areas where colleagues can meet work.
In his 1997 essay, Michael Goldhaber in Wired predicts online influencers, and perhaps we can see this today as a shorthand for advertising where everyone’s trying to get your attention. Do you think this is sustainable – should big tech be winding down some of the techniques they are using to get people hooked? Is this healthy?
You are using the word Hooked and that could imply that it’s some form of drug which is a loaded way of putting it. Influencers to me is a sub-set of the content industry. Tech comes in for a lot of slagging off because those platforms – Google, Facebook, Amazon, are the engines for growth for small to medium size businesses. And those businesses provide a lot of the jobs which are critically important during a pandemic or as a result of the pandemic, so really getting to grips with the technology. We would be surprised by the significance and the development of the platforms and vice versa.
There are issues around privacy, there are issues around brand safety, there are issues around selections. Facebook has hired at least 30,000 people to monitor content. So, they have tried to go a long way to try to deal with it. Google’s decision on third-party cookies is all about making decisions in advance. I believe that Google made that decision about third party cookies because they feared regulatory evolvement. They saw what was happening in Australia, they were worried about what may happen in France and other parts of the world.
My company is a review platform for B2B events – Like a TripAdvisor but events focused – in an age where likes and dislikes are published almost immediately after going through an experience, do you personally look at reviews online before making a purchase? Wasn’t it just simpler to ask a friend and carry on – and now we are consuming all this data and spending all this time prior to making the purchase?
David Ogilvy used to say that the most powerful or one of the most powerful ways was word of mouth because that is the reason why influencers, recommendations whether online or word of mouth are so powerful. So, reviews are in a way an ‘online word of mouth.’ Having a point of view is crucial because you follow that advice. This is powerful and can be dangerously used as well. In India there have been cases of influencers being paid to influence, and the product or the service does not live up to the promise and there has been a bounce back, and quite rightly repercussions. It’s not a sole area but it is an important area and I do listen to what people have to say about our products and services.
One very interesting fact that you mentioned in one of your interviews a year or two back was – today tech companies are actively hiring for ‘Editorial’ roles and you pointed to this as a trend. Tech brands are concerned about how they represent themselves online. What are your predictions for those who aim to grow in the digital space? What direction are we headed in?
Digital growth will continue at significant rates, if you look at Google, it extrapolates their Q1 – 180 billion to 240 billion in terms of revenues. Facebook 80 to 110 – Amazon 20 to 35 that’s a 100 billion plus of new revenues in digital, some of it comes from traditional media, others from primary demand for digital and some from smaller companies as I mentioned before. So, digital is the primary demand and others is secondary demand from traditional, but the outlook is very strong. We have two growth drivers, first the secular growth at digital transformation. This year and next year from the rebound from the pandemic, for India it will be slightly slower but global growth rates will be up by 5 to 6 % and 4 to 5 next year so strong growth rates as a result.
You have accomplished so much in your career, what is the long-game for you? What advice would you give Sir Martin in his 20s?
The advice is to learn Chinese and to learn code. Geographically, China and India are going to be the growth economies, that’s one thing. That’s the geographical bucket. India will grow quickly once we are out of the pandemic situation. So, I am very bullish and I am a raging bull on India and especially on China too. The other thing is code which is another language for tech and it is just about learning a language where growth is important, and of course to learn languages where growth is important per see which is tech. With S4 Capital, the mission is to create an advertising and marketing services model because the old model has passed and people think that it was created in the 1950s by IPG. A new model is needed so the game and the objectives are to build a new advertising and service model and get rid of the old. So, we are trying to disrupt the industry in a significant way.
Could you tell us a little about your experience visiting India? I believe you were in New Delhi? What was the food experience like?
I haven’t seen all of India but I’ve been around Mumbai and Delhi and I love India. I love Indian food, especially mango chutney, and a nice Chicken curry with mango chutney is something I adore. And I love to play cricket there and it was in Mumbai University, there was ground and the game was WPP vs Ogilvy and they got me out but they let me stay in. We started very easy in the morning and we played for about three to four hours, it’s always great fun but the problem is we Indians are too good for cricket. I like playing cricket, going to the gym, and also Skiing whenever I have the time.
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