S6 Ep 1 | Sir Martin Sorrell: Setting the Record Straight on Work, AI, and What’s Next

0:04Welcome to Beyond Marketing, the podcast. I'm Mara Genovese. I'm the founder and CEO of MgEmpower, a global integrated market agency. Today, we are joined by one of the most influential figures in the history of modern marketing. Sir Martin Sorrell is the founder and former CEO of WPP, and today he is the executive chairman of S4 Capital. For decades, his thinking has shaped how agents are structured, how creativity and strategy are valued, and how marketing operates at a global scale. In this episode, we'll explore leadership through transformation, the evolution of agents' models, and why creativity and strategy remain essential, especially in the AI-driven world.

0:45Welcome to Beyond the Marketing, the podcast, Martin Sorrell. What a pleasure. Thank you so much for taking the time to be here this morning. So I would like to start with, it's more like everyone knows Martin Sorrell, but with your own words, who is Sir Martin Sorrell?

1:00Sir Martin Sorrell:That's for others to figure out. Not for me to say. Not for you. I would say like a big fan, big admirer of your work. Good. And not sure if you remember where we met. Where was that? Ken Lyons. I approached you and we started the conversation. So I'm very glad that conversation brought us here. Good. We just wanted to get from you, like with all change that's happening in the industry of marketing, and we're seeing how AI is scaling really rapidly. It's not scaling rapidly. I think that's the issue. It's scaling, I would say, incrementally, but not rapidly. We see a little bit in visualization and copywriting.

1:44Sir Martin Sorrell:We see a little bit in personalization at scale. We see a little bit in media planning and buying, but no wholesale adoption except maybe in the automobile verticals because of Chinese EV competition and AV competition, and then secondly in financial services because of the fintech platforms. But I would disagree. I think AI has not affected the industry yet to any significant degree. People talk a lot about it, like you do, and others, and I'm on podcasts, but that's not the reality. So I disagree. I think it's been very slow in terms of adoption and what probably has needed a little bit of economic force, a little bit of economic pressure in order to do it.

2:33Sir Martin Sorrell:Because in those two verticals I mentioned, automobiles and financial services, there's economic pressure from lower cost alternative suppliers or producers or manufacturers. It was blowing a chill wind for the fossil fuel manufacturers. or car manufacturers, the traditional manufacturers, and also the traditional branch banks. So I sort of disagree. I think we're at the threshold. People test, they do workshops, they experiment, but they don't do much. I think when I, maybe I didn't fridge well in the same as I scale up. There's a lot of capacity. There's a lot of capacity being built. Yes, but that's not agencies doing that.

3:17Sir Martin Sorrell:In fact, it's probably the opposite. The agencies probably haven't built capacity, hence you see IPG surrendering, giving up and being acquired by Omnicom. And whether there will be other similar capacity reductions, I don't know. We'll have to see what happens. I mean, Densoo International is for sale, certainly in whole or in part. WPP probably is vulnerable because its market cap is now, what, 5 billion? having been as high as 20, 25 billion. And you've got two Omnicom and Publicis at 25 billion. You've got Densu at about 7 or 8 billion, then WPP at 5 and Hovas at 1.5. So we have to see how all that shakes out.

4:01Sir Martin Sorrell:I don't see anybody at the moment who's got the enthusiasm or guts to take on the significant management challenges at Densu International or WPP because they're both in a tough spot. Havas does have capacity. It doesn't have financial capacity on its own. The Bollaret family have got access to a significant financial capacity to make it work. But beyond that, it's quite difficult for Havas on its own. The two companies that are in real trouble, Densoo International and WPP, it's so complex. And then there's this cloud of AI hanging over it because people are finding it difficult to analyze whether it's what exactly the impact of AI will be on the traditional industry.

4:52Markets have said, because they've compressed the valuations.

4:56Sir Martin Sorrell:I mean, even publicists and Omnicom are selling significantly, their market prices are significantly off their highs. So the market is saying we're not sure about what the impact of AI will be on your traditional model. So we've got maybe 26. President Trump was on broadcasting last night about what may or may not happen next year. We'll see what happens in the midterms. I think he'll do well in the midterms. It was intriguing that Susie Wiles gave that interview to Vanity Fair. I mean, looking at it, looking at the pictures, they claim that she was misquoted or the quotes were mispositioned. But looking at the pictures, they obviously knew that it was either going to be a book or a major article because there were some heavily stylized photographs.

5:52Sir Martin Sorrell:But what's interesting about it is why did she give that set of interviews? One of the possibilities could be that she's nervous about the results of the midterms and won't be around afterwards. I don't think so. From the article, she was quite confident. I think she's right to be confident. The big, beautiful tax bill will kick in in March or April of next year with a lot of subsidies for taxpayers. So I think Trump will go to the country in the midterms with a tailwind. But the economic difficulties may come after that. And that's when the pressure might build. I mean, U.S. companies are doing well at the minute.

6:37Sir Martin Sorrell:EPS Q3 of this year was up 12 percent. You take out the hyperscale is up 9 percent next year. Still forecasting Goldman are forecasting 12 percent EPS growth, which is very strong. and it's a little bit odd for the agencies because usually when companies are doing well well not usually historically when companies do well and profitably agencies do well that's not the case now and I think the reason is agencies are really heavily represented in the 300 billion of ad revenues that are going south in traditional media rather than the 700 billion which are going north dominated by Alphabet, by Meta, by Amazon, Alibaba Barbara, Tencent and ByteDance.

7:20Sir Martin Sorrell:So it's a difficult environment for traditional agencies to navigate. And I think there will be continued pressure because of the growth of digital. Now 70 % of the market, probably by 2030, be up to about 80%. And it continues to dominate. And the agencies don't have as significant representation in that growing 700 billion as they do have in the declining 300 billion. So my view is AI will become more and more attractive, but it needs a little bit of economic pressure on clients to adopt faster. It's about change management. It's not about technology, about change management. And turkeys don't vote for Christmas, so people will be hesitant to change until they have to.

8:10But do you have any optimistic view for the future? Of the future of agents? Because you're saying like about...

8:17Sir Martin Sorrell:Not for the traditional agencies, no. So what's your view about? Well, it depends. Everybody conflates what's happening in the traditional markets with the digital markets. And it's two different markets. It's a trillion dollars, or last year it was a trillion dollars. This year it would be about 1.1. Next year, 1.2. And last year, 700 billion was growing. That's around, as I said before, around Alphabet, around Meta, Amazon, Alibaba, Tencent and TikTok or ByteDance. The traditional, the 300 billion, the fight for Warner Brothers Discovery between Netflix and Paramount is really a fight over an asset which has got declining revenue.

9:01Yeah, it's crazy. Well, it's not crazy.

9:03Sir Martin Sorrell:I mean, I wouldn't say that Ted Sarandos and Greg Peters and Reed Hastings are crazy. Far from it. They're extremely intelligent. So I assume they know what they're doing. But the struggle between Paramount and between Netflix for Warner Brothers Discovery is a struggle for a company whose ad revenues are declining. And it's a company which didn't have live sport like Disney or like Fox, which didn't have live sport to buttress the decline. So when you say about agencies, if you're talking about traditional agencies, the future is pretty grim. If you're talking about digital agencies, agencies that are focused on that space, that's a space that's growing at 10, 15, 20 percent, I would say the future is rosy.

10:00Sir Martin Sorrell:So unfortunately, analysts, when they analyze the business, journalists, when they write about the business, conflate two markets into one. And it's two different worlds. One is a digital world that's growing and one is a traditional that's declining. You talk a lot about creative and strategy not being replaced by technology, meaning AI. Well, I mean, I think that is the case, but of course, it's the hope. I mean, there is a, I think for the next, I don't know how long it will be, if you look at some of the stuff that Eric Schmidt has been talking about. There's some interesting, actually, some films on TikTok of Eric Schmidt talking about the impact of machines on not just our industry, but generally.

10:51Sir Martin Sorrell:There will come a time when machines will be more powerful than people. There are some people who believe that never can be the case. I'm not sure I agree. and Jeffrey Hinton, who was one of the founders of DeepMind, if you remember, he resigned from DeepMind because he thought he was worried about the existential threat of AI, the existential threat being that machines will become more powerful than people. Well, we in our industry cling on to the belief, I think quite rightly. I don't think it's wrong, but it may be a short to medium term thing that the technology is the tools and people will be empowered by the tools and strengthened by the tools, which I think is the case in the short to medium term.

11:37Sir Martin Sorrell:Whether that means in the longer term we might be in a situation where the machines actually become more powerful than people, we'll have to see. It's interesting, in Eric's, I was looking at the film a couple of days ago, he says that when machines become more powerful, we should pull the plug. So we shall see, we shall see. I mean, there will be bad actors. The Oppenheimer moment, as I've said before, has gone. The opportunity for us to control the expansion of AI in a coordinated fashion for governments to do it has gone. You know, they've gone beyond that. These are nation states. The head of MI6 is very interesting.

12:22Sir Martin Sorrell:She was interviewed. She did her annual interview a couple of days ago, and she said that the heads of the tech companies are like country presidents. And I've been saying for a significant period of time, they're like nation states. And if you run a company which has got a$4 trillion market cap or like NVIDIA,$5 trillion, and Musk's compensation is geared to Tesla getting to$10 trillion, a$10 trillion company, and I think Musk will get there, a $10 trillion company would be the third, if you equate market cap to GDP, would be the third largest country in the world after the US and China. The US is 28 trillion and China's 18.

13:08Sir Martin Sorrell:So they are like country presidents. And if you're four or five trillion, I was in India recently, last week or so, that's as big as India, bigger than the UK, bigger than France, bigger than Germany, probably about the same size as Germany, bigger than Italy, bigger than Spain. So these guys, they are all guys, actually. There's not a woman amongst them, sadly. These guys are country presidents and they have enormous power. And they're investing half a trillion a year in expanding AI capacity, data centers, energy sources and chip capabilities. So they're going to get more powerful, not less powerful.

13:53Sir Martin Sorrell:But that ability to control them, I think, has gone. So I'm not gloomy about it. What I'm just saying is, I think, realistic about it. So for the agency industry, it means you have to accelerate your exit from traditional media and accelerate your entry into the digital ecosystem or whatever you want to call it. And what about the consumer? What about the consumer? Because consumer, we can see that more and more. Yes, of course, they're engaging with technology, with AI, but it's clear consumer-want brand experience. Consumers have engaged more with AI than enterprise. That's the interesting thing, is that we as consumers use AI far more, I think, all the data shows than enterprises have used it in doing their business.

14:44Sir Martin Sorrell:So the consumers actually have engaged with it far more. I mean, everybody you talk to from kids aged four or five, maybe even younger now, to people my age are amazed by the power of AI, what it can deliver in a nanosecond in terms of information. You know, I mean, you use Nano Banana. I was using it recently, a day or so ago. It's quite extraordinary what you can do with that. So, you know, everybody can become a copywriter and a visualizer. Everybody can become an advertising agent, at least in some sense. We'll see how capable they become as a result of it. But no, it's democratizing. And I sort of disagree with you.

15:34Sir Martin Sorrell:I think consumers, you know, it's almost like a K economy where consumers have embraced the technology and enterprises have only done it sporadically or episodically. They haven't done it generally. Yeah, because it's always just more like on the human connection side. So do you think this will be less and less? Well, I mean, it's not just about AI. I mean, one of the things we're having to wrestle with, it was accelerated by COVID, is the lack of connection. What's really interesting is people crave experiences, maybe because they have less social interaction. The propensity, if that's the right way of putting it, of people to travel, to experience live experiences, to want to engage with one another has got greater.

16:26Sir Martin Sorrell:I mean, when you look at the travel statistics, given the way the economies are behaving, you look at the travel statistics, you look at where people are spending their money, you look at inflation and its impact on food prices and everything. It is quite remarkable that people travel through airports. It is quite remarkable. In fact, you know, I would say I don't know what the stats are, but my guess is that business travel because of the use of technology. so the technology enables you to do things that you didn't do before but live experiences, you know, there is a thirst for so all these technologies, because they become more they're used in a more distributed way probably are going to cause all these social issues that we talk about in relations to loneliness fewer friends, all those statistics that people talk about What's really interesting about the technology, and I'm intuitively against the idea, is the technology enables you to do things in a much more distributed way.

17:35Sir Martin Sorrell:I don't think being out of the office is a good thing. I think people should be in the office seven days a week. I was about to ask you that. But all the data, I've been involved with Harvard Business School on their D3 initiative around AI. The data from the research they have, it's really interesting, suggests that distributed working is more effective and more productive. I'm not sure I agree with that. But I think in our own case with S4 and Monks during COVID, at the beginning of it, it was good. And we gamed from it. because we are digital natives and tech nerds, and therefore it was a good environment for us.

18:23Sir Martin Sorrell:But I think it's sort of over time, as people have become, quote unquote, used to it, it's not been abused, but I think it's become a little bit more lackadaisical, and I think it's a real issue. Most of the people my age or my generation who are running or trying to run companies we've seen it with WVP and supposedly not well received we've seen it with Omnicom we've seen it with J.P. Morgan they all say come back into the office J.P. Morgan is an interesting example because they're building these huge offices in 8 billion pounds of cost for a building in New York and they're going to build one in Canary Wharf here I was in Mumbai as they also go and they've got a huge office there as well so they're in the business of building huge offices so you have to a lot of spend if people are not not in them but i think distributed working certainly in our industry you know if um you lose the spark the the sparks flying between people constructively uh flying between people now there are some jobs like coding i guess whereas coding gets done by ai now but but engineering jobs maybe can be done remotely but generally in our business i think it's good for people it's important very interesting it was a piece of research that the hbs people did on um you know the argument against distributed working is young people and entrants don't learn about the company so what what the research has done was develop programs for companies to to get people to um to to learn about companies learn about company cultures in a distributed way and the results were were pretty good according to the research so actually a lot of the hbs research points to the opposite of what i think which is distributed working works.

20:32Sir Martin Sorrell:It produces more productivity. It's particularly good for men and women with big families or with families. The trend post-COVID was to move away from city centres because of expense as well as COVID, etc. So distributed working may be a factor of life that we have to become aware of and have to, in my case, lump. Because you mentioned a few times that you don't believe in work-life balance. No, I didn't say that. Again, that's misquoting. It's a bit like Susie Wiles and her article. Well, actually, she didn't say she was misquoting. She said it was out of context. No, I didn't say that. Now, what I said was, if you're not having fun, then it's work, right?

21:29Sir Martin Sorrell:And we're saying if you do what you enjoy, life balance goes out the window, doesn't it? I mean, if you enjoy something, you presumably like to do it. I agree. Therefore, it's not work. I mean, work in the sense of it's a four-letter word, beginning with W, which some people don't like. But if you do what you enjoy, then it's not work. I agree. So that's all I was saying. I wasn't saying work-life balance. I wasn't saying family isn't important or anything like that. I was just saying that, you know, you should enjoy what you do. Yeah, if you're passionate about what you do. And what about S4?

22:06What's the due to S4?

22:08Sir Martin Sorrell:Well, you know, we've got a lot more work to do. I mean, we're digital-only, data-driven. We go to market as more efficient. and we're unitary. I think that's a model, ironically, which the holding companies, in a funny way, have all got to do more of. I mean, they've got to be more digital. They've got to be more data-driven. They've got to be more agile because they're indicted for lacking agility and they're multi-branded. And all of them are trying to become one company. I mean, we wait with bated breath to see what the strategic unveil for WPP is in January with McKinsey's help. But my bet would be we have to be one WPP.

23:00Sir Martin Sorrell:We have to get rid of all that overhead that's built up at the holding company level, the group brand level, and then the brand level. you know if you look at the people in c container house for example in london you know what do they all do um so it'll be about overhead and it'll be about how do we get everybody to work together in a much more concerted way you know it's not it's not if you're running ogilvy for example you really have to look at in the context of wpp you can't look at it in the context of Ogilvy. So, and Omnicom are going to do the same. Publicists have done it, or have done it to the most sophisticated degree.

23:47Sir Martin Sorrell:Havas are doing it. Dentsu have tried it, but maybe there's something in the Japanese management culture that prevents it from happening. It hasn't happened very successfully. Now, coming back to S4, we have to do it more effectively than we've done before. We haven't done it as well as we could do. Do you think the challenge of integrating agency based on... No, it's a challenge of integration per se. I mean, integrating business... Organic growth is always better than growth through mergers or acquisitions. Mergers and acquisitions are difficult. They're easy to do but difficult to implement.

24:25Sir Martin Sorrell:And getting people to work together, Our industry is not an industry where people work together easily. You know, they love to be on podcasts. They love to be on the front page of campaign or ad age. And it's more about them, the individual, than the institution. And I've said this before, more than work-life balance. The real jewels are the people who share. So those people who can run Ogilvy, I would call out somebody like Miles Young. Miles Young could run Ogilvy and run it brilliantly and at the same time contribute to what was going on at WPP. Those people are very rare. There are people that can run a brand well, but then don't, in the context of the organization, share stuff.

25:25Sir Martin Sorrell:AI is really interesting because it may ensure through democratizing knowledge that that happens. Because people control things by controlling information. If you're running a silo, a vertical, how do you maintain control of it at the top is by restricting the information. Jensen Wang is really interesting. He has 51 direct reports. I've said this many, many times. You went to McKinsey and asked them what's the appropriate management span, they would say 12 or 13 direct reports. With Jensen, he manages to do it with 51, doesn't do apparently many one-on-ones, sets people objectives for the year and monitors their success or otherwise in achieving those objectives.

26:16Sir Martin Sorrell:And I think that's what you're going to see. I think you're going to see flattening of organisation when people really adopt AI at scale. And the other thing that's interesting is that deeper you go inside companies, I think the more people are prepared to share knowledge. The deeper you go, there's sort of like an inverse relationship between sharing and where you are in a company. The deeper you go, the more people share. The further up you go, the mucky mucks like to control the information and prevent it because that's how they maintain their power. And what you really want is you want everybody sharing at huge scale.

26:55Sir Martin Sorrell:And AI enables you to do that. If you give people access to everything, like we have at least 900 people working on Google globally. If you give them access to everything we're doing on Google, as long as it's secure and the right management levels, that's a huge advantage because everybody knows. and can contribute. And that's, I think, what people don't understand still. I mean, the Internet was the first breakthrough, smartphones, mobile phone was the second breakthrough, if you like, and then the third breakthrough is AI. You've been in this journey for many, many, many years. Do you get excited every time there is an industry change?

27:41Sir Martin Sorrell:Well, I mean, whether it's exciting or not, I mean, it's interesting to explore. You know, you've got the IPO of SpaceX coming in 26. And, you know, I've been thinking about that. I mean, market valuation, people, it's gone from 800 billion, I think, to potentially one and a half trillion. It'll make Elon Musk even wealthier. You get excited about that. I mean, yes, I mean, you do. and it it it's you know it's gonna it to me SpaceX will be like Google when it floated in 1999 I think it was Amazon when it went public Meta when it Facebook when it went public you know SpaceX to me will be another Nvidia obviously Microsoft I mean these are all companies I mean the interesting thing about our industry is that we've witnessed the growth and development of all those companies spacex probably doesn't influence our i'm going to say our industry as much as maybe the other things i mentioned obviously the internet did the smartphone did ai does uh but but maybe we'll have an agency on the moon who knows or on mars but the the um but you know that that heralds another another really interesting era so and SpaceX you've had Jeff Bezos with Blue Origin you've had Richard Branson all space explorers and you've had others that was the Russian guy I remember his name who was also really interested in space travel Yuri can't remember what his second name was but so you have these people who've said how important space development and exploration will be.

29:41Sir Martin Sorrell:But, you know, I think SpaceX and the IPA will be a seminal moment in the development of space travel. And what about, can I ask the future in terms of, you talk about the agents model will change in 2026. Again, you know, I think you're painting everything with the same brush. there's a sort of traditional agency model which is changing. It's changing. So you could say, you know, if you were looking, the irony is, and nobody's written about this, the original holding company was IPG. There was a guy called Marion Harper in the 1950s who used to have a Boeing jet that he used to, I think it was, maybe it wasn't a jet, maybe it was a jet at that time, which he was supposed to, the apocryphal stories and coming to London and staying, because McCann and Lintas and others had their major operations with the US and Europe at that time because Asia and Latin America.

30:45Sir Martin Sorrell:Ogilvy and JWT developed their businesses in Asia and Latin America, but the Americans have been very focused on the US and Europe. Anyway, Marian Huffer used to come, and his theory was you couldn't have conflicting accounts in the same agency. I don't know whether his thinking was also that it was better to have people focused on smaller units and incentivized around smaller units. I don't know. But certainly part of the big part of his thesis was if you want Unilever and Procter in the same or Ford and GM in the same business, you had to have separate separate brands. Brands. Brands. That's now, I mean, the irony is Krakowski surrenders, sells IPG to Omnicom.