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Sipping Americanos with

Sir Martin Sorrell

Sir Martin Sorrell needs no introduction. He has been one of the most influential figures — if not ’the most’ — in the advertising industry for the past two decades.

After leaving the giant he created called WPP he is now in full swing to build another empire, S4 Capital.

We sat down with him for a coffee earlier this summer in his London office.

LAJOS

As we sit here alongside a fairly big TV screen I wonder if you still watch linear television... And if so, when was the last time you watched an entire commercial break without zipping away very quickly?

Sir Martin

I watch a fair bit of TV when I get up in the morning I watch CNBC - if I'm in London - and pretty much have it on during the day, and if I walk in in the morning - I live nearby -, I listen to BBC News on Radio 4.

If I'm in New York, I'll do CNBC, during the day I'll try to have it on, occasionally Bloomberg although I'm not as enthusiastic about the confusing screen (laughs). In the evening - if I'm in London - I'll watch the news at 10, and then there's a program called Newsnight, a news summary program which I watch and then I'll go to sleep probably about quarter past 11.

In the old days, I used to watch Charlie Rose at night, he interviewed me actually on the 20th anniversary of the Charlie Rose Show. I said to him: I hope it doesn't take you another 20 years to interview me, of course, it was a prophetic remark (laughs)

[Refers to Charlie Rose's talk show taken off air at the height of the Me Too movement]

So I do watch linear television.

Now on the commercial breaks: yeah, I do watch commercial breaks because being in the business you know I do watch them.
I must admit when I watch Amazon Prime now with advertising or Netflix with advertising…

LAJOS

...you feel better...

Sir Martin

...no, I don’t feel better actually [laughs], I probably get a bit irritated [laughs], if I could fast forward I would fast forward...

No, I mean, listen, I watch the ads because I’m interested.

LAJOS

I ask this for a reason: every time I bump into an interview with you or watch you talking in Cannes, your topics are mainly about the big issues: geopolitics, big business, big media, etc. but I’ve never actually heard you talk about the products your companies are producing.

Sir Martin

Well, you know as David Ogilvy said I’ve never written an ad in my life. I’m a consumer of advertising not a creator of advertising.

You are being nostalgic!

No-no-no, I hate nostalgia!

LAJOS

Yeah, but I mean some of your companies were crown jewels of the advertising industry and they were producing some of the greatest ads, and I wonder if you are perhaps concerned about the quality of the products this industry is pouring out… because I am pretty much. To me, the overall quality is way below what we had ten years ago or so.

Sir Martin

Yeah but that’s a rose-tinted spectacle via you are looking at things, you sound like the people who look back at Don Draper and plead for that area…

No, I am looking back 10 years only…

Life has changed: technology and data are really important but that doesn’t mean that you have to be any less creative, or that creativity isn’t as important as ever, or that the big idea is not as important as it was.

Now, that’s not the case.

LAJOS

So you're saying that the outcome of our industry is still as good as it was 10 years ago?

Sir Martin

I think your ability to evaluate the creative work is much more difficult today. And people in London or New York tend to think they are the cat’s pajamas but if you go to Buenos Aires you see as good a creative work there in traditional or digital as you will find anywhere in the world.

Go to Sydney or Melbourne and I would argue similarly, so there is this belief that great creativity (whatever that means, it’s not English actually, but great creativity) is the preserve of New York or London but it isn’t. So it’s become much more broadly spread and I would argue that data gives you better insights. A lot of people - sort of taking your point of view - are worrying about it, 'cause they think it was better in the old days but this is so viable bias it’s called, you know you survive and you look back and think it was better. It’s a bit like saying the young are different today than they were in my age - I mean it is different but it’s the same. And the quality work gets done, the ingenuity of the creativity is just powered in a different way today. It’s powered by data which gives you insights, it doesn’t destroy creativity… it’s like people would complain about Milward Brown’s copy testing because how can you reduce creativity to a number…

LAJOS

I am not nostalgic about the past but…

Sir Martin

...you are being nostalgic!

[laughs]

No, no, no, I hate nostalgia but advertising used to be part of pop culture, especially here in the UK…

It still is!

LAJOS

Is it?

People write codes to avoid them and develop products to skip advertising and 99,5% of them are just annoying noise…

Sir Martin

That’s bullshit, it still is, I mean look at the Super Bowl, in the context of American culture that’s super important,… the ads of the Oscars,… so I think you are being nostalgic.

LAJOS

You wouldn’t agree then with people who say - like Scott Galloway - that the advertising industry is on a slow path to death?

Sir Martin

No, it’s becoming more and more important! There is a digital industry and there is a linear industry: I mean you could argue that the linear industry is different to what it was and I agree with that, but the digital industry’s got huge investments behind it, clients are making huge investments. Out of 950 billion, last year 650 was digital - it’s just you’re uncomfortable with the way it gets executed because it’s different. I mean we enable now with AI in a different way - we don’t like AI either which you think it reduces things to a technological execution.

I think that technological execution gives us the ability to be even more creative.

LAJOS

Do you see it as a threat to your media business?

Sir Martin

You will get better media planning out of it because a machine will be able to analyse the alternatives far better than a human being.

LAJOS

But that also means that clients could do it themselves and they won’t need your media agencies...

Sir Martin

Quite possible…

I mean it’s quite possible that what gets done externally gets done internally. Now for example with the growing importance of first-party data, internal capability, marketing capability becomes more important. So you might be right that agencies will disappear because there will always be a validation function, you know in other words the client wants always somebody to say this is objectively the right way of doing it, and not be subjective.

You wouldn’t give your all media budget to Rupert Murdoch, not because he is discreditable ……. but because he has a subjective interest, so you always want somebody to say what is the right media choice.

MY HERO IS JFK

LAJOS

Coming back to my previous observation about your subjects in public appearances being mainly geopolitics and/or media.

Is that because media is the power part of our industry and power is something you are attracted to?

Sir Martin

That’s another problem that you creatives have, I mean if you were back 40 or 50 years, when we were trying to create media agencies, people who ran creative agencies hated the idea, because the creatives were dominant, the planners were dominant but the media people didn’t get the Ferraris and the corner office.

That 950 billion USD of the communications business, let’s call it a trillion, probably 5% is agency fees. So around 50 billion. But the other 950 is media. That’s where the investment is being made.

Life has changed and if you think about it, the real guts of the business, where the big investment is, is in media.

LAJOS

Coming back to the power question, you mentioned in a BBC interview that when you first traveled abroad you went to the US and directly to the Democratic Convention where you met the Kennedys…

Sir Martin

…I met one of the Kennedys…

…and this made a huge impact on you.

Well, my hero is JFK. And I traveled with a friend whose hero was also JFK, and we were actually together on a bridge in Cambridge the night he was shot, I’ll always remember that.

We met a Swedish guy, his name was Derek Thomas on Magdalene Bridge, which is a famous bridge in Cambridge, and he said: have you heard? Kennedy has been shot… we went back to college and we watched it on television. So, yes, he was my hero.

Certainly, I always had a picture of him on my desk when I was at Saatchi’s and also at WPP.

EUROPE, I AM VERY WORRIED ABOUT

LAJOS

Ever thought of going into politics? A Lord Sorrell, a Secretary Sorrell?

Sir Martin

No-no-no-no, that would be a huge mistake! Because the levers you have in politics are very little…

But I am interested in the dynamics. You know for example the growth parts of the world: North and South America, the Middle East, and Asia (with a question mark over China given Taiwan) but then that drives you to India, Indonesia, Thailand, the Philippines. Africa is too volatile in my view - I had lunch the other day with somebody who is very well connected with Nigerians and he was saying several people he knows telling him that you go to politics in Nigeria to make money. Corruption is rife. So Africa is too volatile, we have more wars we ever had.

But Europe I am very worried about.

LAJOS

I heard you saying once that the biggest problem here is that the economical, technological, and social power will shift away, but I think it’s a done deal, it has been moved away already.

Sir Martin

Yes, it’s power in more sense but it’s also growth opportunities and productivity and investment. I mean if you look at how the US economy has diverged from the European economies - maybe not so in Eastern Europe, it’s been maybe a bit better, but given the war in Eastern Europe - you know if you and I were on a board of directors and somebody said I wanna pour money into let’s say Hungary, a little warning signal would go off here (points to his head) saying that is that really what we wanna do? Should we be doing it in Mexico? Should we be doing it in Columbia? Or should we be doing it in America? Or Canada? Or India? All different…

I think understanding that is really important. Because the reason is, you are looking for the places in the world where there will be growth and where your clients will wanna grow, that's one thing and the other side of it is technology, two things are laying on them at the moment, one is fragmentation geographically and the other one is technological escalation, which is driven by AI but it's not just AI, it's quantum computing, it's the Metaverse, it's blockchain, so all these things are driving clients to think about how they can be more efficient.

So the world has changed, it used to be "consumers consume everything everywhere"- that is still true, but it's different because there is now much more geographical volatility and variation.

LAJOS

Some say globalization is over or at least on the reverse track.

Sir Martin

I don't think it's over, I just think that the nature, the political dynamics, and the nature of politics and populism and the gap between the rich and the poor is driving those differences, you know...

LAJOS

Yeah, but there are blocks building again...

Sir Martin

Yeah, I mean, the blocks will building, there is the Chinese-Russian-North Korean...

... Iranian...

...Iranian alliance, right? if you like, then you have the US, UK, France, Germany, Spain maybe, Australia, Japan, this block, then you have the stuff in the middle, the Bricks.

The interesting thing is if you look at the GDP of the E7, that's the Emerging 7 countries, it is bigger than the G7. So the point is, that these countries are becoming - we used to call them developing countries that they used to hate - I call them Fast Growth Countries, right? I just think the world has changed and we in our business tend to think of it being irrelevant for us, but it's highly relevant 'cause we work with the world's biggest advertisers and some of the world's biggest companies and they look at things geographically and they look at them technologically. These are two buckets: everything you do, you can reduce in my view to a geographical bucket and a technological bucket.

LAJOS

I like the saying of Modi, the Indian prime minister. He told Chancellor Scholz of Germany, that you have to get used to it that your problems are not the world's problems - but the world's problems are very much your problems.

Sir Martin

[laughs]

I think Modi is really good in the context of India, he is not to everybody's taste, but is a great leader.

LAJOS

Talking about politics, let's turn to the moral or ethical side of business - given your Eastern European and Ukrainian roots, I can imagine that you have an extra bit of emotional connection to this brutal war of Russia - how do you judge the brands or companies that remained in Russia?

Sir Martin

I don't like them.

It's like I don't like Ireland for criticizing Israel and I don't like South Africa. I wouldn't visit South Africa now. You know I think Ramaphosa is a hypocrite: his platform was that he was gonna reform and look what's happened.

So I am emotional about that - and that's difficult because you know, obviously South African commodities we have to deal with, I love South Africa, it's a wonderful country, it is God's country and it's a tragedy what's happening there... a tragedy.

LAJOS

Hungary's economy is heavily dependent on Germany's economy and the platform of Angela Merkel was "Wandel durch Handel", which means 'Change through commerce', that was her approach to Russia and China, she believed that this was the way to change Putin or Xi bit by bit. Now we can see how successful this approach was...

Sir Martin

But that's in a way what the Americans are doing with China now, there are twin tracks: commercially the American say, well the Chinese depend on us, we depend on them so we have to keep going, but politically it’s different…

Commerce is important, but not in Merkel's sense, because it's not together with politics: one can have a political track and a commercial channel.

LAJOS

But that was the same with the Soviet Union…

Sir Martin

No-no, because China is 18 trillion out of 100 trillion (the world’s GDP) America is 28 and see, if you put those two together, the two biggest economies of the world, Russia was never near that.

LAJOS

So coming back to the war, Merkel's idea was that if I do commerce with Putin, I tie him to Europe commercially, he would never ruin that relationship by starting a war.

Sir Martin

But he looks at it differently, he looks back to Peter The Great, he spends Covid studying history books...

So I think that doesn't hold for Russia, but it holds for China. And Xi's problems, heavily in-debt state-owned enterprises, youth unemployment, lousy real estate market, which is the core, he doesn't have enough room to maneuver. In fact, the Chinese that I talk to - wealthy private sector Chinese - believe he will reverse course because the economy is so difficult and just like he reversed course on Covid - you remember, Shanghai was locked down, everybody was being pissed-off, if someone on your apartment floor got Covid, you were carted off to a hospital, your dog was left in the flat to die, and everything like that - and he reversed his position overnight!

I think that's gonna happen again.

THIS COUNTRY IS TURNING INTO A WONDERFUL MUSEUM

LAJOS

You might know Matthias Döpfner...

Sir Martin

Yes.

LAJOS

...the CEO of The Springer Publishing House, former advisor to the German Chancellor. He just released a new book, where he proposes a new approach to authoritarian regimes by introducing a so-called 'democracy tariff’ on commerce.

Sir Martin

How would that work?

LAJOS

We would put let's say a 15% tariff on every commercial good coming to the EU from non-democratic/authoritarian regimes. If they make political progress, i.e. they launch democratic reforms, the tariffs would be reduced.

What do you think of such an approach?

Sir Martin

I don't know if this could work...

I think Germany's problems and the problems of France, the UK or Spain are problems of maturity - these are old countries, that are not as productive as they used to be, the investments necessary are not there, the tax system is too strong, they are too high, too difficult and they destroy incentive.

You know this country is turning into like Italy, turning into a wonderful museum: I go out this week, there is the Chelsea Flower Show, the sun is shining, the tourists all appear, it's a bank holiday weekend next weekend, I mean the place, London comes to a hold this week. It's a museum.

A lot of people I know, obviously foreign, they come here and say London is wonderful, the hotels are wonderful, the restaurants are wonderful, the theatres, the films, culture, everything spectacular, the food is fantastic but I say go 2 or 3 miles up the road and see - and it's frightening. Other parts of the country are an embarrassment.

LAJOS

Coming back to you, you started WPP when you were 40 and I started my agency when I was 42.

Sir Martin

What did you do before Cluso?

LAJOS

I worked at various agencies as a copywriter and later as creative director, but I always knew that I wanted to have my own company, but I simply wasn't ready before - but what made you wait so long?

Sir Martin

Well, my father said, find an industry you enjoy, find a company in it that you enjoy, spend a few years building a reputation, not to be famous, but for people to respect you, and if you’d like to start a company, start your company. That's how he saw it, though he never built his own - he had to leave school at 13 to feed the family - he was one of six - to earn money, because his parents came from Ukraine, and my mother left school at 13 as well. My father was a retailer so he was working 7 days a week. He worked on a Sunday, either visiting stores in the morning or new sites or in the afternoon he was getting all his sales figures from his divisional managers, but it wasn’t his business, he’s treated it as if it was his own business.

LAJOS

I belong to those who say they intellectually enjoy running a company. Others would argue - like Elon Musk - that running a company is like chewing stone, it’s a constant pain in the ass because on his desk would only land problems that his managers could not solve. I completely disagree with him, I think it’s the most amazing job to run your own company and I suspect you have the same approach.

Where do you put your focus as a CEO?

Sir Martin

Strategy and structure.
But the detail is important.

LAJOS

And are you rather feared or loved?

Sir Martin

Respected I think.

LAJOS

Time management - I am always amazed by prime ministers or heads of big organizations, how they find the time for small things, a coffee like this for instance...

Sir Martin

…a slight relief…

[laughs]

LAJOS

I remember Carlos Gohsn when he was running Renault and Nissan simultaneously he famously had 2 briefcases, one for Nissan and one for Renault…

Sir Martin

[laughing]

…the suitcase he was gonna travel in…

[refers to Gohsn being smuggled out from Japan in a giant instrument case to avoid prison]

LAJOS

…you must have had then thousand suitcases for all the companies WPP owned or even now… or you just have the most brilliant managers?

Sir Martin

Uh, I think the biggest issue is getting everybody in the same direction, and it’s really difficult.

LAJOS

Especially when people have so many different beliefs and convictions. I just read that there are now almost a hundred (big) agencies who signed a petition that they won’t work for any oil company…

Sir Martin

And that is right, we won’t work for fossil fuels or tobacco. The reason for that is our people. Our people decide.

It’s not because we made a decision at the board, it’s our people say, we don’t wanna work on it.

It’s so simple.

DO YOU OWN AN ISLAND?”

NO.

LAJOS

You were once asked in a BBC program if you could bring one book to a desert island, what would that be, and you said probably the Talmud.

Do you own an island?

Sir Martin

No.

LAJOS

But are you a believer in religious terms?

Sir Martin

I believe in God in the sense that I think there must be something that was the initial spark. You know, my mind, or my head says there must be some force that created the very first thing. Whatever the thing was.

LAJOS

Look at that flower, this is a design… there should have been an art director involved…

Sir Martin

Yeah,

[laughs]

there should be something somewhere that was the inspiration, or catalyst, or whatever. There are some fingers.

[laughs]

LAJOS

But you don’t practice religion, like going to the synagogue…

Sir Martin

I do go to the synagogue, 3 days a year and I like Friday nights because Friday nights are when you get family together, I don’t do enough of it, not like that, but my parents used to go there every Friday night and I miss that actually in a way, because it’s a wonderful way to get the family together.

SHE SAID: BUY SOME BASQUIAT FOR 500 DOLLARS EACH. AND HE SAID NO.

LAJOS

Charles Saatchi famously said that there were many clever people at the beginnings of Saatchi & Saatchi but you were way the cleverest of all of them…

Sir Martin

Well, he’s got some lapses in judgment…

[laughs]

Charles is a genius in his art - I actually launched with him yesterday and he said to me that he had seen Basquiat, he was introduced to him by an art dealer, and apparently Basquiat was painting in her basement, and this woman said to Charlie: come and see Basquiat - he’s never liked him - and she said: buy some for 500 dollars, 500 dollars each, right? And he said no. Today Basquiat’s pictures go for 90 million and he passed.

So everybody makes mistakes.

But Charlie was brilliant creatively, Maurice was the account man, he was the suit, and intellectually very strong, very bright.

Charles was intuitively bright, left school when he was 15 I think he assaulted somebody in a playground with a knife. I think he was thrown out of school.

[laughs]

LAJOS

Ever had a temptation to launch a social media account - so that you could share stories like this with the world?

Sir Martin

Absolutely not, no.

Forgive me if I don’t.

LAJOS

Now, looking back, could you name one thing that you would do differently for sure?

Sir Martin

Wouldn’t have taken on so much debt for Ogilvy in 1989. Actually, it was a convertible preferred stock, which when stock markets are weak becomes preferred so the interest is what you pay not the conversion so that was the biggest mistake.

LAJOS

Let’s assume that - contrary to you - I do own an island.

Is there a book you would recommend to pack in my suitcase?

Sir Martin

The book I loved was The Theory Of Managerial Capitalism.

[laughs]

– it was a book that I read at Cambridge...

LAJOS

Who wrote it?

Sir Martin

Robin Marris, a left-wing Marxist, uh, maybe not a Marxist but probably close to it… all the economists were left-wing at Cambridge, Richard Kahn, and Jen Robinson who actually went to the Commune, she used to walk around in Chinese Commune gear - this is the 1960's (!), right? - she went to China and used to walk around in King's Collage holding hands with Richard Kahn...

LAJOS

A sheer provocation...

Sir Martin

[laughs]

Very much so!

HERE TODAY,
GONE TOMORROW

Sir Martin

So Marris was a left-wing economist and he wrote about how in companies basically you have managers who are stewards really and you have owners. I was fascinated by that - intellectually very lightweight, but really interesting.

You know, on your moral thing: if you say your purpose is to maximize long-term profitability, and the keyword is long-term, hyphenated word, you get around all the problems.
Because that implies, you gonna do everything to make sure your people be looked after, everything to make sure your suppliers be looked after, the environment is looked after.

Milton Friedman said, maximize the profits of the firm - just make one alteration: maximize the long-term profits of the firm, then you take care of it. Because it means you're looking not for short-term gain but to maximize return over a long period.Because that implies, you gonna do everything to make sure your people be looked after, everything to make sure your suppliers be looked after, the environment is looked after.

The trouble at the moment I think is that things become so volatile... you know private equity is 4 years, 5 years - too short term.
My father said: stick with the same firm, he believed in long-term.

I'm not sure, coming back to where we started our conversation, the thing you should be really worried about is not creativity but the fact that things have become so short-term. Here today, gone tomorrow. You build a company and then you sell it. Or you build a brand and you get out. You see all these small brands - Charlie's ex-girlfriend has a Unilever-backed cosmetics brand that she's built up and now she wanna sell it. I am not after that, I wanna build a business.

LAJOS

Well, I couldn’t agree more.

— Sir Martin, it was great talking to you.

Sir Martin

Pleasure! Lovely to see you Lajos!

— The End.

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