WPP CEO Martin Sorrell told a conference at the Paley Center this morning that his clients are wasting 15-25% of their advertising budgets. He just doesn’t know which 15-25%.
WPP is the largest ad agency holding company; it owns Ogilvy, Y&R and JWT among other venerable brands.
Invoking the twentieth century department store owner John Wanamaker’s well-known lament, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half,” Sorrell was transparent about the difficulty of optimizing advertising dollars in a multi-platform universe and confided that there’s “a lot of VC money going into solving that issue.”
Sorrell was preoccupied with tracking the “changing patterns of consumer demand and habit.” The $70 billion investment U.S. companies make each year in television advertising is commensurate with consumer TV consumption habits, he said. Yet magazine and newspaper investment was probably 50% too high. Sorrell said he will continue to invest in internet measurement tools. “Patterns are changing,” he commented, “so measurements have to change too.”
Reuters editor Chrystia Freeland, who moderated the talk, obsessed over the idea that Sorrell’s greatest concern had to be “disintermediation” by media giants like Google and Twitter – she mentioned the point several times. But Sorrell did not seem worried. He confided that Google is a “friendlier frenemy” than it used to be and that he intends to expand collaboration with the company in the future.
Overall the advertising mogul was bullish about the future, stating that WPP had record years in 2011 and 2012. “As long as the cake grows, I’m fine,” he said.
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