Sorrell says traditional media must adapt to digital

by Mark Banham, Brand Republic 21-Jun-06, 09:00

LONDON - Sir Martin Sorrell, chief executive of the world's second largest advertising network WPP Group, has warned that agencies and media owners must retain talent in the digital sector to secure their future.

Speaking at the Newspaper Society's Home Truths conference, he said that one of the main challenges facing companies in the future would be to "find, retain and incentivise good people".

The WPP chief executive said that advertisers and agencies are failing to deal with the shift in consumer behaviour towards the digital sector, even though WPP says it achieves more than 15% of its revenues from the burgeoning online sector.

Sorrell referred to the free classified advertising site Craigslist, which has been challenging revenues from the classified sections of US newspapers.

He also referred to the threat of global online giants such as Google, which he said seem set on setting up their own electronic media planning and buying exchange, to effectively erode the importance of agencies in the media planning and buying transaction.

Sorrell said that it was a classic example of how new technologies can threaten older, more-established media companies that would have to use a mixture of forming their own online departments or acquiring new internet and interactive companies to counter the threat from new online firms.

He said that the rise of the internet would also affect the employment decisions of new employees who would prefer to work in smaller, less hierarchical companies, where they were not faced with overbearing bureaucracy.

"You saw it in the first web boom, and you're seeing it now. There are significant changes in the attitudes of young people."

Sorrell also said that media companies should be wary of giving away content for free: "I have always had a problem with free content. It goes against the grain.

"I think if the consumer values the content I think you should charge him or her for it. The logic is don't do that build readership then you can charge for advertising."

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