Sorrell: The holding companies are fudging the numbers

Chris Pash
By Chris Pash | 12 September 2019
Martin Sorrell

Sir Martin Sorrell has accused the big global advertising holding companies of obscuring a fall in earnings.

Sorrell, who last year left the business he founded, WPP, the world's biggest advertising company, today spoke to analysts after releasing first half numbers from his new venture, S4 Capital.

He pointed to internal mergers at holding companies which he says obscure a real fall in traditional creative agency earnings.
"We all agree that digital is growing at 20%, we all agree that the market is growing at 3% or 4% or 5%, so what the hell is happening to traditional?" he told the analysts.

"I think that's something of an unanswered question. None of the holding companies will fess up on this.

"What you are seeing is increasing aggregation of mixed statistics.

"In WPP’s case, they mix JWT with Wunderman or VML with Y&R. So you don't know what has happened to the pro forma performance of the traditional creative agencies."

He suspects the holding companies don't want to reveal the fall in the traditional business.

“If I were an analyst, I would castigate WPP for consolidating 73% of its business into one property. It makes no sense,” he says.

"You could easily separate the media business from the advertising business. So why is it they're not prepared to?

"I think the reason is that they don't want to reveal what the negative growth rate (is in) the tradition creative agencies."

S4 Capital, a self-described new age/new era digital advertising and marketing services company, posted a 44.4% rise in billings to GBP184.23 million for the six months to June, as the company puts revenue growth ahead of net profit. He told analysts that the current economic climate was creating uncertainty.

"But from the digital side of the equation, I think probably it accelerates the digital transformation," he says.

"When you look at digital it appears to be better in terms of the data-driven nature of it and the targeting of it ... better statistics about the veracity of what you're doing."


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