Robert Sawatzky
Mar 15, 2024

‘Turkeys don’t vote for Christmas’: Martin Sorrell on the fate of agencies in an AI age

SPIKES ASIA 2024: Like it or not, technology is not done revolutionising the marcomms industry, and agency networks need tech-minded people, transparent relationships and the right global addresses to survive, he said.

Haymarket's Atifa Silk & Martin Sorrell
Haymarket's Atifa Silk & Martin Sorrell

Martin Sorrell, executive chairman at S4 Capital, took the stage at Spikes Asia 2024 on Thursday to a packed house with a cagey audience that didn’t respond well to a show of hands as to whether they belonged to agency, brands or platforms.  

“Who are you then?” mused Sorrell, before launching into an interview with Haymarket Media managing director Atifa Silk where he expounded on his vision for the future of the marcomms industry, as touched on in his recent opinion piece for The Times.  

Today’s industry is full of blurred lines between folks in creative, media, PR, publishers and platforms, all of whom are excited and terrified at where new AI technologies will take them.  

Rapt audience in hand, Sorrell served his non-sugar-coated vision, portions of which have already been chronicled, on where the opportunities and pitfalls lie for agency groups as new technologies and relationships supplant existing ones.  

“Turkeys don’t vote for Christmas,” he quipped, noting that there will be significant attrition in areas like media planning and buying where the existing 200,000+ employees in the media planning environment will be culled in favour of algorithms. “The days when we rely on a 25-year-old media planner and buyer will be over,” he added.

Also, whether agencies like it or not, the advantage of their closer relationships with clients will be ceded to platforms as new technologies like Google’s Performance Max and Meta’s Advantage+ become more proficient at directly explaining results to clients, with fewer agency people needed in the process.  

Ultimately, Sorrell said, we will get to a model where ideation teams will use technology like Sora or Lightricks where text or voice is instantly converted into video. That video will then be fashioned into a plan and a buy which an algorithm will be able to deploy.   

“Agencies will increasingly become validators,” Sorrell said, “because you’ll need an independent third party to validate what the platforms and algorithms are implementing in the right way. That's the way it’s going to go.”  

The techniques needed, he said, are still creative and marketing-based, but it will be critically important for agencies to employ people with deep technological capabilities for these roles.  

Five areas where Sorrell sees AI impacting advertising and media
   

  1. Visualisation and copy writing. What took three weeks can take two hours. More use of text to visuals. This is a double-edged sword for agencies selling their services on time. 
  2. Hyper personalisation. Netflix has already taught us how to use data to create content at scale. AI can help build content factories at huge scale. The price of the assets will go down but the number of assets deployed will be greater so it will be a positive for agencies.  
  3. Media planning and buying. This will be revolutionised as media planners and buyers are replaced with algorithms.  
  4. Agency and client efficiency. Linear marketing plans that used to cost millions will be reduced to hundreds of thousands and client-agency bottlenecks are streamlined. 
  5. Knowledge transfer. The ability for people to share information inside companies is going to be revolutionised by AI, creating flatter organisational models with the ability for all teams to upskill and act quicker.

Scale and structural change

In this future scenario, scale will again become increasingly important for agencies to grow enough revenue.  

“I think for the very small it’s going to get tougher. The mid-sized and the large-sized are where the opportunity is, but for the large-sized, the model is going to have to change quite drastically,” said Sorrell.

One change needed is billing according to output rather than time spent, he said, since the current model incentivises agencies to keep larger headcounts and time-consuming processes over efficiencies.  

Transparency

Another area where change is needed—which has less to do with AI and more with blockchain—lies in the area of transparency, particularly around media planning and buying and removing middle players from the media supply chain.  

Here Sorrell referenced the “elephant in the room” surrounding the arrests of GroupM media trading executives in China

“There has been very little explanation either by the government or the investigating agency or indeed the target of that investigation as to what went on,” he noted, while adding that the case points to a much bigger industry issue. 

“The simple fact is that agencies derive a significant amount of their profitability from media discounts, some of which have contractually gone back to clients and some of which have not. It’s not just a problem in China. There’s an issue around the model from a client and procurement department point-of-view that has been there for a number of years.” 

Here he pointed to the difficulties some clients have had in fully understanding their TV spend in Japan, for example, where Dentsu and Hakuhodo have controlled the market.  

Geography

While instances of corruption and a lack of transparency in certain markets have kept other global industry leaders at an arm’s length from Asia, Sorrell has long made a point of visiting the region often to better understand the markets.  

“The reason why it’s good to come to Asia is because it’s growing,” he said, noting that by 2050, even as the relative importance of Japan’s economy declines, Asia will still be home to three of world’s top five economies in China, India, and Indonesia. He referred to the region as “the world’s premier league from a growth and size point of view”.

In the meantime, Sorrell has his eye on other strong growth markets like Latin America, while also cautioning that flag planting without understanding markets won’t cut it. He said: “Pick your geographic region much more carefully than before.” 

Catch up on content from Spikes Asia 2024.

Source:
Campaign Asia

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