WPP CEO Sorrell: Google Will Overtake News Corp As Our Largest Media Investment This Year Or Next

WPP CEO Sorrell: Google Will Overtake News Corp As Our Largest Media Investment This Year Or Next

INGRID LUNDENposted 22 hours ago

Martin Sorrell, the CEO of WPP, today laid out a stark picture of how significant a role digital is playing for the advertising giant. Speaking at the FT Digital Media Conference in London today, he said that digital now accounts for 34% of WPP’s media investment, amounting to some $72 billion, rising “from zero to over one-third in about ten years, the age of Google,” he said.

Google, he said, is the second-largest recipient of that digital spend at the moment, at around $2 billion for the quarter, but that it will soon overtake the single biggest beneficiary at the moment, News Corp. Sorrell described Google as “a media owner masquerading as a tech company.”Sorrell referred to these numbers as a preview of WPP’s quarterly results, which are out tomorrow.

He added that at the moment AOL and Yahoo are each getting around $400 million to $500 million in ad spend via WPP. Facebook, despite its size and current popularity, is only around $270 million. Twitter, he added, is “much smaller.”

With a lot of the interest in media spend focused on video content — TV viewing is still the most popular format for media consumption — you can see how significant YouTube is for Google’s wider strategy. You can also see some of the logic behind why there have been reports that Yahoo is eyeing up an acquisition or a stake in Dailymotion, a smaller but persistent rival to YouTube. Those talks have never been confirmed by either party, but we understand they have been ongoing for some time, and could value the company at around $300 million.

But video is just a part of the strategy. The reason for Google’s strength, Sorrell said, was because there are “five legs to its stool”: search, display, video (“we’re seeing increasing google penetration especially in high TV markets,” he noted), social google+ and mobile by way of Android and Admob. Android is the world’s most popular smartphone platform at the moment and by some estimates in some markets like like China is accounting for over two-thirds of all mobile sales.

Speaking on a panel with Jeff Bewkes, the CEO of Time Warner, and Thomas Rabe, the CEO of Bertlesmann, Sorrell described the other two media companies, more known for traditional media assets in publishing, television and film, as having “come to terms” with the new digital reality, making efforts to bring their products to new screens and following new consumption patterns. But he also questioned whether they are doing enough: “Their stocks are both at all-time highs,” he noted, “but is there a degree of complacency?”

Sorrell also noted that while digital spend continues to grow there remains a “disconnect” between consumer use and ad investments. In TV, about 43% of time is spent, which mirrors investment, and outdoor and radio “are about right.” But the two big discrepancies are in newspapers and magazines, where we’re still investing 20% but consumers spending 7-9%; and internet and mobile where “we’re spending 30% of our time but media only investing about 20%.”

As we have noted before, WPP’s aim is to have 40% of its business coming from digital in the next five years (that was an aim set last year), meaning that it is well on its way. Investments that WPP itself has made to boost its own ability to meet digital demand include buying digital agency AKQA and startup investments, such as leading a $10 million round in MySupermarket.com last year.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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