CANNES — Recession? What recession? From where Sir Martin Sorrell is sitting, the omens are still good.
The former WPP CEO, now executive chairman of his own S4 Capital, is a reliable soothsayer and business bellwether when it comes to the economy and advertising.
In this video interview with Beet.TV editorial advisor Jon Watts at Cannes Lions, Sir Martin explains what he thinks the year ahead holds.
Digital advertising may be taking over from local media as the first indicator of waves economic crashing ashore.
So, in a troublesome economy, there is growing concern that digital is trending down. Snap, for instance, has guided investors to expect lower ad revenue growth.
Sorrell, whose S4 Capital is focused on digital segments, says the company’s Q2 revenue grew 66% year-over-year last year, which he acknowledges is a tall order to beat, but Sorrell says: “My guess is that, for Q2 of this year, we will show two-year stacks of, like, 85, 90%. It’s huge.”
Meta first, Google last
Sorrell explained how he sees the major beneficiaries and platforms panning-out.
“If we are going into recession, the last digital pillar to fall will be Google … Google is the strongest …
“Meta obviously has had its pressure. Amazon is growing, although it’s come under under pressure … TikTok has been seen as a lower-cost alternative … It’s probably taken $10 billion or so away from, from Meta in terms of ad revenues.
“Do I see softness? Not yet. I would expect that you’d see it first with Meta, which you’re seeing because of the IDFA; the war has had an impact.”
Set tech free
Sorrell had a clear message to regulators – if you want to reduce the risk of a recession, ensure tech is not hamstrung.
“I think what the regulators and the governments are starting to understand is you can’t have a strong economic and indeed social fabric without strong tech,” he said.
“The indiscriminate regulation and restriction of tech doesn’t work because it hobbles the country ultimately. Having a strong tech ecosystem is really, really important for national strength.
“My bet would be that you’ll see the regulatory pressure decline … to encourage a strong ecosystem. It’s fundamentally important to the strength of any economy to have a strong tech ecosystem with strong big players and strong small players.”
Sweet Fanny Adams
Where does Sorrell want digital to move the needle? On media transparency.
He hopes blockchain technologies will remove “frictions” in the ad ecosystem, because – despite numerous explosive reports and years of apparent corrective action – the specifics of ad trades can still be too “opaque”.
“Although clients have complained about it and trade associations have complained about it, actually, in many markets of the world, nothing has been done about it,” Sorrell laments.
“It was pretty frustrating as an agency ahead to be criticised for opacity in some areas when there were these glaring things that clients knew all about but did nothing about.”