The Future Gospel According to Sir Martin Sorrell: Content Ownership is King

You are receiving this report as a corporate subscriber to Jack Myers Media Business Report As a subscriber you have access rights to the archives and economic data at wwwjackmyerscom For more information contact maryannjackmyerscom Agency subscribers have the right to redistribute this content to clients with preapproval For information contact Jack MyersquotWe have to treat media owners almost as we do our clientsquot advises Sir Martin Sorrell chairman and chief executive of WPP At the recent National Association of Television Programming Executives conference Sir Martin urged both legacy and new media owners to understand WPP39s strategy In the following report I share direct comments from Sir Martin and draw conclusions about the company39s future growth strategies which appear to be to acquire and develop principal positions in media content and work closely with WPP clients media owners and content distributors to exploit those rights Sorrell announced an expanded programming and content division within WPP39s Group M that will position the company as a proactive global content producer across multiple platformsDependence exclusively on legacy business models is not consistent with the future gospel according to Sir Martin quotIf we think the pace of change has been rapid just stand byquot he warns There is a generational shift taking place in companies When leaders of companies change and new generations take control the attitudinal shift in these companies is enormous Inherent in this warning is acknowledgement of the accelerating trend toward marketers shifting budgets from legacy media to social media mobile search and online video See Myers 200020102020 Media Investment Forecast quotLegacy media owners are very challengedquot he said quotNew media companies are hungry We intend to be in the forefront of this new opportunityquot Group M Entertainment headed by television veteran Peter Tortorici was formed several years ago to produce network television programming for and with clients but Sorrell39s comments suggest a far more expansive business model focused on content development production and distribution across all platformsSorrell points out that in the current model media owners try to sell prepackaged and preordained packages In the future he argues quotthey will need to understand what clients want and how they are going about achieving their individual goalsquot Implicit in Sorrell39s comments is the clear trend toward marketers integrating content into their marketing mix and the reality that agencies are better positioned to respond to this changing dynamic than are media companies See Marketers are Becoming Media Companies The challenge for Sorrell and WPP will be to structurally reorganize and define the best models for profiting from an aggressive commitment to developing and acquiring content rightsIn the US clients and not agencies own the relationship with media sellers and as I pointed out in my Top 10 Issues Confronting Marketers Agencies and Media quotwhether the agency should have more opportunities to own the media relationship directly is an important issue for the future Agencies amp8230 have multiple opportunities to profit from creativity knowledge asset ownership insights and technological capabilities In many instances they are prevented from doing this by US legacy requirements of transparency and dealownership Agencies are relegated to being commoditized buyers of inventory This is one of the most critical issues that will be debated and will determine the future health of the industryquotBy focusing on production distribution and consumption of content the chairmen of WPP and Group M are restructuring the fundamental economics of the media seller agency and advertiser triumvirate positioning WPP to profit from international merchandising and other backend rights to the content it develops and acquires In the mid1990s ten leading global advertisers including General Motors Coca Cola ATampampT and MasterCard contributed several million dollars to a programming development consortium Television Production Partners that accrued these backend rights for the clients rather than the agenciesAs the world39s largest agency conglomerate with 15 billion in revenue on 70 billion in billings and operations in 107 countries WPP has the global relationships to effectively position itself as a major content producer and distributor across multiple platforms It also has the organizational resources capabilities expertise experience and most importantly the management commitment from the very top In this context WPP and Group M can be expected to become active in the content sales and distribution business including building relationships with consumer electronics companies pay television companies like HBO and Showtime Netflix Roku and other nontraditional agency partners It39s not inconceivable that in the near future WPP could negotiate for global sports rights and rights to high profile live programming Sorrell described the company39s investment in China39s quotWe39ve Got Talentquot as a template for future dealsMore than a decade ago Group M Chairman Irwin Gotlieb explained to me that the longterm growth of his company depended on the ability to leverage ownership rights to media properties Several of the company39s investments such as addressable TV company Invidi Buddy Media and Wild Tangent among other contentcentric companies and have been responsive to that goal While most of the major agency conglomeratesholding companies are actively engaged in content development the vision and plan of WPP has been evolving for years and can be expected to dramatically impact the traditional relationship between the company and its media partners At NATPE Sir Martin asked media companies to understand WPP39s strategy They will be well served to do just that

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The Future Gospel According to Sir Martin Sorrell: Content Ownership is King

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