Martin Sorrell, the CEO of WPP, today laid out a stark picture of how significant a role digital is playing for the advertising giant. Speaking at the FT Digital Media Conference in London today, he said that digital now accounts for 34% of WPP’s media investment, amounting to some $72 billion, rising “from zero to over one-third in about ten years, the age of Google,” he said.
Google, he said, is the second-largest recipient of that digital spend at the moment, at around $2 billion for the quarter, but that it will soon overtake the single biggest beneficiary at the moment, News Corp. Sorrell described Google as “a media owner masquerading as a tech company.”
Sorrell referred to these numbers as a preview of WPP’s quarterly results, which are out tomorrow.
He added that at the moment AOL and Yahoo are each getting around $400 million to $500 million in ad spend via WPP. Facebook, despite its size and current popularity, is only around $270 million. Twitter, he added, is “much smaller.”
With a lot of the interest in media spend focused on video content — TV viewing is still the most popular format for media consumption — you can see how significant YouTube is for Google’s wider strategy. You can also see some of the logic behind why there have been so many reports about Yahoo eyeing up an acquisition of Dailymotion, a smaller but persistent rival to YouTube.
But video is just a part of the strategy. The reason for Google’s strength, Sorrell said, was because there are “five legs to its stall”: search, display, video (“we’re seeing increasing google penetration especially in high TV markets,” he noted), social google+ and mobile by way of Android and Admob.
Speaking on a panel with Jeff Bewkes, the CEO of Time Warner, and Thomas Rabe, the CEO of Bertlesmann, Sorrell described the other two as having “come to terms” with the new digital reality, making efforts to bring their products to new screens and following new consumption patterns. But he also questioned whether they are doing enough: “Their stocks are both at all-time highs,” he noted, “but is there a degree of complacency?”
He also noted that while digital spend continues to grow there remains a “disconnect” between consumer use and ad investments. In TV, about 43% of time is spent, which mirrors investment, and outdoor and radio “are about right.” But the two big discrepancies are in newspapers and magazines, where we’re still investing 20% but consumers spending 7-9%; and internet and mobile where “we’re spending 30% of our time but media only investing about 20%.”
