The 10 Trends Shaping the Global Ad Business according Sir Martin

As we plan for the future of our business, looking across the 110 countries in which we operate, we try to identify the trends that we think are shaping the global marketing services industry. Here’s our top ten:

1. Power is shifting South, East and South East

New York is still very much the centre of the world, but power (economic, political and social) is becoming more widely distributed, marching South, East and South East: to Latin America, India, China, Russia, Africa and the Middle East, and Central and Eastern Europe.

Although growth rates in these markets have slowed, the underlying trends persist as economic development lifts countless millions into lives of greater prosperity, aspiration and consumption.

2. Supply exceeds demand – except in talent

Despite the events that followed the collapse of Lehman Brothers in 2008, manufacturing production still generally outstrips consumer demand. This is good news for marketing companies, because manufacturers need to invest in branding in order to differentiate their products from the competition.

Meanwhile, the war for talent, particularly in traditional Western companies, has only just begun. The squeeze is coming from two directions: declining birth rates and smaller family sizes; and the relentless rise of the web and associated digital technologies.

Simply, there will be fewer entrants to the jobs market and, when they do enter it, young people expect to work for tech-focused, more networked, less bureaucratic companies. It is hard now; it will be harder in 20 years.

3. Disintermediation (and a post-digital world)

An ugly word, with even uglier consequences for those who fail to manage it. It’s the name of the game for web giants like Apple, Google and Amazon, which have removed large chunks of the supply chain (think music retailers, business directories and bookshops) in order to deliver goods and services to consumers more simply and at lower cost.

Take our “frienemy” Google: our biggest trading partner (as the largest recipient of our clients’ media investment) and one of our main rivals, too. It’s a formidable competitor that has grown very big indeed by – some say – eating everyone else’s lunch, but marketing services businesses have a crucial advantage.

Google (like Facebook, Twitter, LinkedIn and others) is not a neutral intermediary, but a media owner. Google sells Google, Facebook sells Facebook and Twitter sells Twitter.

We, however, are independent, meaning we can give disinterested, platform-agnostic advice to clients. You wouldn’t hand your media plan to News Corporation or Viacom and let them tell you where to spend your advertising dollars and pounds, so why hand it to Google and co?

Taking a broader view of our increasingly tech-based world, words like “digital”, “programmatic” and “data” will soon feel out-dated and obsolete as, enmeshed with so many aspects of our daily lives, network-based technologies, automation and the large-scale analysis of information become the norm.

The internet has been a tremendous net positive for the advertising and communications services business, allowing us to reach consumers more efficiently, more usefully and often more creatively on behalf of clients. But it won’t be long before those clients stop asking our agencies for a “digital” marketing strategy (many already have). It will simply be an inherent part of what we’re expected to offer.

4. Changing power dynamics in retail

For the last 20 years or so the big retailers like Walmart, Tesco and Carrefour have had a lot more power than manufacturers because they deal directly with consumers who are accustomed to visiting their stores.

This won’t change overnight, but manufacturers can now have direct relationships with consumers via the web and e-commerce platforms in particular. Amazon is the example we all think of in the West, but watch out for Alibaba, the Chinese behemoth due to list on the New York Stock Exchange later this summer in what could be the largest IPO in corporate history (and heading a capitalisation of around $200 billion).

5. The growing reputation of internal communications

Once an unloved adjunct to the HR department, internal comms has moved up the food chain and enlightened leaders now see it as critical to business success.

One of the biggest challenges facing any chairman or CEO is how to communicate strategic and structural change within their own organisations. The prestige has traditionally been attached to external communications, but getting internal constituencies on board is at least as important, and arguably more than half of our business.

6. Global and local on the up, regional down

The way our clients structure and organise their businesses is changing. Globalisation continues apace, making the need for a strong corporate centre even more important.

Increasingly, though, what CEOs want is a nimble, much more networked centre, with direct connections to local markets. This hands greater responsibility and accountability to local managers, and puts pressure on regional management layers that act as a buffer, preventing information from flowing and things from happening.

7. Finance and procurement have too much clout, but this will change

Some companies seem to think they can cost-cut their way to growth. This misconception is a post-Lehman phenomenon: corporates still bear the mental scars of the crash, and conservatism rules.

But there’s hope: the accountants will only hold sway over the chief marketing officers in the short-term. There’s a limit to how much you can cut, but top-line growth (driven by investment in marketing) is infinite, at least until you reach 100% market share.

8. Bigger government

Governments are becoming ever more important – as regulators, investors and clients. Following the global financial crisis and ensuing recession, governments have had to step in and assert themselves – just as they did during and after the Great Depression in the 1930s and 1940s. And they’re not going to retreat any time soon.

Administrations need to communicate public policy to citizens, drive health initiatives, recruit people, promote their countries abroad, encourage tourism and foreign investment, and build their digital government capabilities. All of which require the services of our industry.

9. Sustainability is no longer “soft”

The days when companies regarded sustainability as a bit of window-dressing (or, worse, a profit-sapping distraction) are, happily, long gone. Today’s business leaders understand that social responsibility goes hand-in-hand with sustained growth and profitability.

Business needs permission from society to operate, and virtually every CEO recognises that you ignore stakeholders at your peril – if you’re trying to build brands for the long term.

10. Merger flops won’t put others off

Despite the failure of one or two recent high-profile mega-mergers, we expect consolidation to continue – among clients, media owners and marketing services agencies. Bigger companies will have the advantages of scale, technology and investment, while those that remain small will have flexibility and a more entrepreneurial spirit on their side.

FMCG and pharmaceuticals (driven by companies like 3G and Valeant) are where we anticipate the greatest consolidation, while our own industry is likely to see some activity – with IPG and Havas the subject of constant takeover rumours. At WPP we’ll continue to play our part by focusing on small- and medium-sized strategic acquisitions (31 so far this year, and counting).

Advertisers should slash newspaper and magazine budgets, says WPP boss | Media |

Interesting & provocating… “Sometimes I prefer 10g of caviar vs 1kg of french fries ” …

Advertisers should slash newspaper and magazine budgets, says WPP boss | Media |

Sir Martin Sorrell says WPP finds huge disparity between outlay on advertising and time consumers spend reading publication

Sir Martin Sorrell, chief executive officer of WPP

WPP SEO Sir Martin Sorrell says Google, Facebook and Twitter are ‘media owners masquerading as tech companies’. Photograph: Brendan McDermid/Reuters

Sir Martin Sorrell, the chief executive of WPP, has said advertisers should think seriously about slashing the amount they spend onnewspapers and magazines – and accused Google, Facebook and Twitter of being “media owners masquerading as tech companies”.

He said that WPP – which he said spends $73bn (£47bn) globally on buying ad space across media from TV and press to Google and Facebook – had found a huge mismatch in the amount advertisers spend on newspapers and magazines compared to the time consumers spend reading them.

He said that the data related to the US, where WPP spends $40bn annually buying ad space, but that it was probably indicative that most of the world was “going the same way”.

“TV viewing is about 43% of consumers’ time, [ad] investment is 43%, outdoor [advertising] and radio are about right,” he said, speaking at the FT Digital Media Conference in London on Thursday. “The two big [anomalies] are newspapers and magazines. We are still investing 20% [of client ad budgets] but consumers are only spending 7-10% of time. That has to change”.

Jeff Bewkes, chief executive of Time Warner, didn’t agree that the issue related to magazines. Time Warner owns magazine division Time Inc , the owner in the UK of Marie Claire publisher IPC Media that it is looking to spin off into a separate business.

“At Time Inc rue revenue is down in advertising 6-8% a year, but readership has stayed up,” he said. “Young people are reading the same as they were [across platforms]. Not sure I buy the data on reading less, maybe that is newspapers not magazines. As a magazine goes from a glossy picture, think of fashion magazines, they are not going down. With the move on to [devices such as] tablets – pictures, video – there is no reason they can’t continue to do what they do now.”

Sorrell said that the second anomaly is internet and mobile where in the US it counts for about a third of time spent by consumers, but that the ad spend level is about 20%.

He said that in terms of where WPP invests its $72bn of ad spend on behalf of clients, News Corporation gets the biggest share, clocking up $2.5bn last year.

However Sorrell added that Google is “a juggernaut” with WPP spending $2bn on ads across Google products last year, up a massive 25% year-on-year.

He said that by the end of 2014 Google is likely to supplant Rupert Murdoch’s media empire at the top of the list of media owners where WPP spends client money.

“I do regard Google as a media owner, yes,” he said. “These are media owners masquerading as technology companies. Google sells Google, Facebook sells Facebook. Twitter sells Twitter.”

He said that last year WPP spent about $500m of client ad money on AOL/Yahoo and about $200m on Facebook, a huge boost on the previous year’s $200m. He said that the spend on Twitter was “very much smaller”.

“If I was going to invest money in all these stocks where would invest my money?” he said. “I would in Google and Amazon. If buying for my grandkids that is where I would put it.”

La croissance organique de Havas plus forte que Publicis et WPP –

La croissance organique de Havas plus forte que Publicis et WPP –

Reuters – publié le 01/03/2012 à 18:41

Havas a annoncé jeudi une croissance organique plus marquée en 2011 que celles de ses concurrents européens Publicis et WPP et a dit ne pas vouloir se hâter pour faire des acquisitions pour doper sa croissance dans les émergents.

Vincent Bolloré, président et premier actionnaire de Havas. Le sixième groupe publicitaire mondial a annoncé jeudi une croissance organique plus marquée en 2011 que celles de ses concurrents européens Publicis et WPP et a dit ne pas vouloir se hâter pour faire des acquisitions pour doper sa croissance dans les émergents. (Reuters/Eric Gaillard)

Vincent Bolloré, président et premier actionnaire de Havas. Le sixième groupe publicitaire mondial a annoncé jeudi une croissance organique plus marquée en 2011 que celles de ses concurrents européens Publicis et WPP et a dit ne pas vouloir se hâter pour faire des acquisitions pour doper sa croissance dans les émergents. (Reuters/Eric Gaillard)

Le sixième groupe publicitaire mondial, qui s’est refusé à toute prévision chiffrée pour cette année, a dégagé un résultat opérationnel courant annuel en hausse de 8% à 220 millions d’euros, améliorant sa marge de 30 points de base, à 13,4%.

Le groupe, dont Vincent Bolloré est le président et le premier actionnaire, a annoncé une croissance organique de 5,9% de son chiffre d’affaires en 2011, à 1,645 milliard d’euros.

Sur le seul quatrième trimestre, la croissance organique ressort à 5,4%, avec une bonne résistance en Europe et un net ralentissement en Amérique du Nord.

Le directeur général David Jones, lors d’une conférence téléphonique, s’est montré raisonnablement optimiste pour 2012, à moins d’une dégradation spectaculaire de la situation dans la zone euro.

Havas affiche 1,4 milliard d’euros de gains de budgets nets en 2011, contre 1,9 milliard en 2010.

Le britannique WPP et Publicis, les numéros un et trois au niveau mondial qui ont réalisé des croissances organiques respectives de 5,3% et de 5,7% en 2011, se sont montrés confiants pour 2012, année qui sera rythmée par les Jeux olympiques de Londres, l’Euro de football et l’élection présidentielle aux Etats-Unis.

ZenithOptimedia, filiale de Publicis, table sur une croissance de 4,7% du marché publicitaire mondial cette année, en progression par rapport aux 3,5% estimés pour 2011.

Les analystes attendaient en moyenne un chiffre d’affaires de 1.630 millions d’euros en 2011 pour Havas, un résultat opérationnel de 212 millions et un résultat net de 133 millions, selon le consensus Thomson Reuters I/B/E/S.

Havas, dont le bénéfice net pdg a progressé de 9% à 120 millions d’euros l’an passé, propose un dividende de 0,11 euro au titre de 2011 – conforme aux attentes – contre 0,10 euro pour 2010.

Même avec une dette limitée à 37 millions d’euros fin 2011, Havas n’entend pas se ruer sur des acquisitions dans les pays émergents, qui ont représenté 16% de son chiffre d’affaires l’an dernier contre 9% en 2008.

Ce n’est pas du tout que nous soyons prudents dans nos dépenses, mais nous sommes patients. Nous n’allons pas nous précipiter pour signer de gros chèques“, a dit David Jones.

L’action a clôturé en hausse de 1,26% à 3,865 euros, donnant une capitalisation de 1,665 milliard d’euros. À comparer à des gains de 1,57% pour Publicis et de 2,99% pour WPP, qui publiait également ses résultats jeudi.

Avec Marc Angrand, édité par Dominique Rodriguez

Le Figaro – Médias & Publicité : Martin Sorrell : «Les prix dans l’Internet sont délirants»

Le Figaro – Médias & Publicité : Martin Sorrell : «Les prix dans l’Internet sont délirants».

Par Marie-Catherine BeuthAlexandre DeboutéPublié le 22/11/2011 à 18:47 Réagir
Martin Sorrell, mardi matin, à La Défense (Hauts-de-Seine)
Martin Sorrell, mardi matin, à La Défense (Hauts-de-Seine) Crédits photo : Jean-Christophe MARMARA/LE FIGARO

Invité aux journées Mobile & Social Media de l’EBG, le n° 1 mondial de la communication expose sa stratégie.

Le britannique WPP, dirigé par Martin Sorrell, détient les réseaux Ogilvy, JWT, Grey ou Young & Rubicam dans la publicité, GroupM dans l’achat médias et Kantar dans les études. Il a réalisé 9,3 milliards de livres (10,7 milliards d’euros) de revenus en 2010.Le FIGARO. – Quelles sont vos prévisions pour le marché publicitaire?Martin SORRELL. – Nous sommes dans la continuité des années 2010 et 2011, mais la croissance ralentit. Les nouvelles des États-Unis sont relativement positives à court terme. Je ne suis pas inquiet pour 2012, qui sera portée par les Jeux olympiques, le Championnat d’Europe de football et les élections présidentielles américaines. Ces événements devraient apporter 1% de croissance supplémentaire au marché. En revanche, 2013 sera l’année du grand test. Il n’est pas impossible que Barack Obama soit réélu, mais avec deux Chambres aux mains des républicains, cela pourrait créer une situation de blocage.

WPP est-il mieux armé que ses concurrents?

Nous misons toujours sur les nouveaux marchés, les nouveaux médias et les études. Nos revenus atteignent déjà 1,1 milliard de dollars en Chine, avec 1200 personnes. À titre de comparaison, la France génère 850 millions de dollars, soit à peu près autant que Publicis. Au Brésil, nous réalisons 700 millions de dollars de chiffre d’affaires, 450 millions en Inde et plus de 200 millions en Russie.

Et dans les nouveaux médias?

Nous gérons 70 milliards de dollars d’achat médias. Or, les groupes technologiques sont désormais aussi des supports publicitaires. Ce que nous investissons dans Google, soit 1,6 milliard de dollars par an, c’est à peu près la moitié de ce que nous achetons chez des groupes médias traditionnels comme Viacom, CBS ou News Corp. Nous devons rester un intermédiaire qui arbitre l’achat d’espace en toute indépendance.

Redoutez-vous la concurrence de Facebook?

Nous ne jouons pas contre les réseaux sociaux. Nous investissons 150 millions de dollars par an sur Facebook et avons pris une participation dans Buddy Media, l’agence de huit annonceurs sur dix sur Facebook aux États-Unis. Je reste néanmoins mesuré sur les opportunités que présentent ces réseaux pour nos clients. Ce sont des phénomènes sociaux et non pas commerciaux. Nos études montrent d’ailleurs que les consommateurs sont vigilants face aux intrusions dans leur environnement social.

Quelle est votre stratégie d’acquisition dans le numérique?

Nous avons trois priorités: changer nos métiers historiques, développer de nouvelles activités autour de nos réseaux Wunderman, OgilvyOne, G2 et VML, et, parallèlement, prendre le contrôle ou des participations dans des entreprises qui ont un impact direct sur notre business. Nous le faisons en tant que capital-risqueur stratégique et non financier, dans les jeux, l’e-commerce ou le ciblage, par exemple.

Devez-vous vous renforcer dans certains pays?

Le prix est devenu un problème dans l’Internet aux États-Unis, au Brésil et en Inde. Les acquisitions de Publicis ont déséquilibré le marché brésilien. Les prix y sont devenus délirants. Ils le sont aussi en Inde, depuis qu’Omnicom a pris le contrôle de Mudra. Cette année, nous avons investi 400 millions de livres sterling dans des acquisitions. L’année prochaine, nous dépenserons entre 150 et 200 millions de livres, soit moins que ce que nous ­reverserons en dividendes, contrairement à l’année dernière.

Allez-vous créer de nouveaux réseaux, comme Havas a commencé à le faire?

Il me semble que le marché évolue dans le sens contraire. Les principaux réseaux se renforcent, au détriment des réseaux de taille moyenne. Seul Wieden + Kennedy tire son épingle du jeu, mais cette position est généralement difficile. Attendons de voir ce que Havas va faire avec Arnold.

Le marché va-t-il se consolider?

Trois grandes questions se posent. Que va-t-il se passer entre Aegis et Havas, sachant que Vincent Bolloré est le faiseur de rois dans cette affaire? Que fera le Japonais Dentsu, premier actionnaire de Publicis, de sa participation? Et que fera Dentsu de cet argent une fois sorti? J’observe qu’il est déjà très offensif dans le numérique aux États-Unis.

Sir Martin Sorrell says mobile apps are ‘holy grail’ for advertisers – Telegraph

Sir Martin Sorrell says mobile apps are ‘holy grail’ for advertisers – Telegraph.

Sir Martin Sorrell says mobile apps are

Sir Martin Sorrell says mobile apps, such as Twitter, have created a new platform through which brands can engage with consumers. Photo: ALAMY

Sir Martin said mobile apps, such as Twitter, have created a new platform through which brands can engage with consumers wherever they are.

“Apps are a classic example of this shift from broadcast to multifaceted engagement,” he said at the Mobile World Congress. “They enable brands to connect with consumers at numerous touchpoints, whether at home or in the shops.”

Sir Martin said WPP is encouraging its clients to “embrace” mobile more aggressively. “In terms of revenue generated [through apps] we are still only at the tip of the iceberg,” he added.

Gartner, a technology research house, has predicted that more than $15bn (£9.4bn) will be spent on app downloads, pictured left, this year, compared with $5.2bn in 2010.

Sir Martin said WPP is likely to record a 5pc increase in organic revenue this year, compared with 3pc to 4pc growth predicted in November.

Can social media really overtake search? | The Wall Blog

via Can social media really overtake search? | The Wall Blog.

2011 has been heralded as ‘the year of social media’. But can it really offer companies as solid a marketing investment as search?

It is, of course, far too late to suggest that social media is going to be ‘the next big thing’. Social media is very big and very much ‘the thing’ already. But without doubt, the ante has been upped of late, and even the men in suits are taking note.

Investment bank JPMorgan recently announced the launch of a new fund to invest in online and digital media companies. According to reports, it plans to raise up to $750 million through the initiative.

This follows Facebook’s recent valuation at $65 billion, while ‘deal of the day’ site Groupon managed to raise $950 million in the financial markets. And with a rumoured billion dollar buyout for Twitter and a forthcoming flotation by business networking site LinkedIn, it seems social media is genuinely becoming big business.

But in a tough economic climate, where marketing departments are under more pressure than ever to deliver a return on investment for their online activities, can the money men’s hype around social media’s ‘value’ really translate into measurable marketing returns? Or should brands stick with tried and trusted search marketing solutions, such as search engine optimisation and pay-per-click advertising?

Social consciousness
There’s no denying that social media is a rich source of potential. Facebook now has more than 650 million global users (equivalent to the third most populous country on the planet) and last year, it surpassed Google as the most visited site in the US, according to Experian Hitwise. But many brands have the attitude that they ‘need to be on’ the likes of Facebook and Twitter – without really understanding how (or even if) they can do it in an effective way.

In reality, the jury is very much still out as to how social media users allow brands to interact in what is essentially their ‘private’ space. As a general rule, it is only the companies that have made significant outlays (and have had the resources to create social media-specific content) that have seen significant returns.

Another fly in the social ointment is that, more often than not, these ‘returns’ are somewhat intangible and difficult to measure – which might make them tough to defend around a boardroom table. Interaction, numbers of followers and ‘likes’ may indicate what ‘positive sentiment’ has been generated by a brand. But they don’t necessarily send people to that brand’s website to make transactions.

Search solutions
By contrast, this is precisely what the search engines have been designed to do. Based on the age-old ‘problem-solution’ format, they handle billions of searches every day, sending qualified leads direct to a company’s online door.

Despite the inexorable rise of social media, evidence confirms that the vast majority of a brand’s online traffic is still driven there by the search engines. According to data recently released by JPMorgan, the amount of traffic referred by Google to sites such as Amazon and eBay is almost three times as high as traffic coming through Facebook.

So in terms of the numbers, then, as opposed to the hype, there’s no doubt that search is the sounder investment. And, on the whole, a much less complicated one, too. Search engine optimisation isn’t without its pitfalls – it has to be done strategically using ‘white hat’ techniques. But its goals are simple to define: get onto the first page of Google, ideally in the number one spot. And these goals are very easy to monitor and measure.

The rewards are tangible too, in terms of increased traffic (and, provided the site converts well, increased sales). Specific stats vary, depending whose research you read, but there is no doubt that the vast majority of online consumers don’t bother to look beyond the first page of results returned – meaning brands in these top spots dominate the market for that search term. And the site at the top of Google can get two or more times as many clicks as the site at number two (with click through rates dropping in line with ranks).

Even the advertising delivered via platforms such as the Google AdWords Search Network is readily accepted as a relevant result of the consumer’s request for information. This is in contrast to traditional advertising which, even in highly contextual and targeted spaces such as Facebook, is ultimately still served up as an interruption to the user experience.

Beyond the ‘froth’
Social media has, without a doubt, changed the way people interact with their friends and keep abreast of trends. But to what extent it has changed the way people shop for products or services is still open to question. And for the time being, marketers would be wise to listen to the numbers, not the hype. Particularly if they’re not blessed with the creativity or budgets to produce the sort of viral campaigns that are needed to genuinely make an impact in the social media world.

WPP chief, Sir Martin Sorrell, recently commented that Facebook’s $60 billion valuation (even before it soared to $65 billion) was somewhat “frothy” – and perhaps this aptly sums up the caution with which companies should treat the social media world. The opportunities for brands to create positive stories and experiences through sites like Facebook are huge. But as yet, they still can’t match the tangible cash rewards that come from being found at the top of a Google search. So although experts are predicting that 2011 will be ‘the year of social media’, businesses would do well to remember that tried and trusted digital marketing methods, such as search engine optimisation and pay-per-click advertising, are still more likely to deliver to the bottom line.

Cara Whitehouse is Head of UK & Europe at Reload Digital, a leading UK Search Engine Optimisation, Search Engine Marketing and Online Strategy compan

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