WPP Chief Martin Sorrell Talks Upfront, Digital Vs. TV and Measurement ‘Mousetrap’

Does Martin Sorrell have the cure for what ails the U.S. media business?

Execs from Viacom’s Philippe Dauman to NBCUniversal’s Steve Burke have articulated the challenges of trying to monetize content when so many people watch shows in new-tech ways. They insist digital views for everything from Nickelodeon programs to “The Tonight Show Starring Jimmy Fallon” are going uncounted.

Sorrell’s efforts to help do that math are not to be dismissed. He is chief executive of the British advertising conglomerate WPP, which spreads more than $75 billion around the globe in advertising outlays and boasts close relationships with big-spending sponsors including Ford Motor, Unilever and American Express. Under Sorrell’s direction, WPP has snatched up stakes in Rentrak, a company that measures TV viewing, as well as ComScore, one of the leading analyzers of online audience activity. With so much TV being watched on the go, Sorrell thinks a company that can quickly find ways to demonstrate consumer activity in those areas in a definitive way has a great opportunity ahead.

Variety caught up with Sorrell during a rare break in his busy travel schedule. The CEO spoke of his desire to build “a better mousetrap” for media measurement and the urgency for TV companies to think about more than just TV.

Your company last year invested in Rentrak and is moving toward buying a stake in ComScore. Why are advertisers are so hungry for new kinds of data?

The world has started migrating to other screens, whether they be tablets or smartphones. There clearly is a change in consumption. In that environment, clients want to know whether they are getting the best out of their investment. The question is what is the best way to do it? What we are going to do is set up this standard — bring the metering and bring the sampling to cover those parts of the media which are not covered or under-covered, and come up with a better mousetrap…And then there’s another thing going on where traditional media owners are underrepresented and they want better measures to demonstrate that free-to-air television offers better engagement than they have been able to do. At the heart of it, it’s about the need to measure consumer media consumption and the fact that millenials and centennials are very different in the way they consume media.

Media consumption behavior is in such flux, but what sort of new status quo do you see emerging in the years to come? What will be the new norm for how advertisers determine what audience is out there?

We would like there to be an industry standard and we would like it to be our industry standard, measuring both offline and online, in the same way we measure TV audiences in 45 countries. A non-U.S. Nielsen, if you like. We have a partnership with Nielsen in one or two places, and in the same way they are regarded as a sort of industry standard for offline in the U.S., we want to make sure we have as good an offline standard as possible and also have an online standard that is acceptable to our clients, who want to measure the effectiveness of their return on investment, and see who can accumulate things more effectively.

In the U.S., the TV upfront is fast approaching and early signals suggest another slice of advertising is about to go to digital and social outlets. If that’s the case, this would mark the fourth straight decline in ad commitments for U.S. broadcast and the second for U.S. cable. How do you see ad support for TV playing out over the longer term?

Until we have a sort of right road and right measurement, you can’t answer the question. It’s all very well to look at Nielsen data and say the real Nielsen data is what I want, but it doesn’t measure out-of-home. They don’t measure if you’re sitting in an airport like I am now, and they don’t measure if you’re in a bar and watching an NFL or NBA or whatever kind of match. … We have to come up with a better measurement mousetrap in order to solve that issue. I think there’s a strong argument to say that traditional media are underpriced, because we don’t know fully where the audiences are. … We know Nielsen doesn’t measure everything. … There have to be bigger samples. At the same time, there has to be a balance not just geographically but functionally, too. People are consuming media on the go, all the time. If I’m getting on a plane and I download a film, which may or may not have advertising on it, or if I’m sitting on an airplane watching ads on the plane, Nielsen doesn’t measure that. It becomes more and more important because clients want more value for their money.

For decades, ad revenue for automakers, movie studios, consumer packaged goods and pharmaceutical concerns helped buoy the TV business. Now we see many of these industries facing their own challenges and earmarking dollars in new ways. Do you see the emergence of any new categories of advertising, such as consumer electronics, that are likely to break out?

Content is becoming incredibly important, whether it’s branded content or sponsored content or content which stimulates the demand for advertising around programming. When I was in Shanghai (recently) I heard Ted Sarandos of Netflix say — I think — that his production budget was a few billion. That’s incredible. Amazon is coming in. Apple is coming in. Google is coming in….I would say it’s not a new-tech category like driverless cars or electric cars, I’d say it is the area of content.

WPP has stakes in Media Rights Capital, the producer of Netflix’s “House of Cards,” as well as Vice Media, of which the company owns 10%. What kinds of content do you think audiences and advertisers will flock to most in days and years to come?

Our biggest media relationship is with Google. We spend on behalf of clients about $3 billion a year, up from $2.5 billion the year before. On most of the rest of the media owners we would spend $750 million to $2 billion. On Facebook, we spend about $640 million, from $150 million the year before. Google is dominant for two reasons. It’s mobile search and traditional search, and the other is video itself. These are very attractive media. What’s interesting about video in a high-penetration market like Brazil or an India or an Italy — the amount of live video is becoming more and more interesting. I think it’s the connection for video that is absorbing a lot of attention. When you think about Netflix and its productions and then what Bezos might do with Amazon and what Apple might do in terms of content or what Google might do, what Facebook might do, it’s starting to look very interesting.

If you ran any TV company, how would you manage for a future where on-demand content delivered via broadband is the norm?

I don’t mind where the spending is. The media cake is about $1 trillion — about $500 billion on old media and the same, $500 billion, on new media and public relations and research … I don’t mind where the trillion dollars is going as long as it’s going to rise. I want the cake to grow. So that’s me investing in Vice or AT&T in (multichannel network operator) Fullscreen. What the networks are all going to do is be agnostic, too. So if money moves from free to air to over the top, you’re not disabled by it. (Traditional networks) have to explore all the areas they are in and try to adopt their content, programming and approach to new media.

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