My firstminute | Sir Martin Sorrell, S4, WPP

Not only are emotions and data NOT opposites, emotions actually ARE data. They are something to be studied and understood. 

Sir Martin Sorrell discusses data and emotions from the point of view of how to harness both in advertising.

In May 2020, we hosted Sir Martin Sorrell, Executive Chairman of S4 Capital and Founder of WPP. Sir Martin Sorrell remained its CEO for 33 years, building it from a £1 million “shell” company in 1985 into the world’s largest advertising and marketing services company. 

Sir Martin Sorrell shared stories about his earliest business days and how he overcame some of his toughest challenges, as well as how he sees the future and how he now enjoys supporting the next generation.

Transcript

00:00:00:27 - 00:00:33:21
Speaker 1
First minute capital is $100 million seed stage fund sector agnostic and proudly backed by a number of top technology founders, including 30 unicorn founders. The My first minute series is about learning from prior generations of successful entrepreneurs and sharing that insights and lessons with the next generation of tech founders. The series has two focuses. One How they got started in their careers that first minute, if you will.

00:00:33:25 - 00:01:04:09
Speaker 1
And two, how they see the world today and what they're most excited about. My name is Spencer Cooney. I'm a co-founder and general partner at First Minute Capital, and today I'm speaking with Sir Martin Sorrell. Martin. We have a lot of ground to cover, as everyone knows who you are and obviously founder of two major businesses, one WPP, the world's largest advertising and marketing holding company.

00:01:04:27 - 00:01:23:10
Speaker 1
You'll see that for 33 years, the longest running tenure of a Fortune one company, I believe. And then in May 18, you founded Ask for Capital, a new marketing venture. And anyone not aware that is now £1,000,000,000 market cap business just two years later. A number of employee I went to.

00:01:23:11 - 00:01:23:21
Speaker 2
Five.

00:01:23:21 - 00:01:48:12
Speaker 1
Hundred 25. There we go. And I think over client basis, as you would expect, Procter and Gamble, Nestlé, Coca-Cola, Netflix, Uber, Google, many, many, many more. But I think, first of all, smart and thank you so much for being here. We really going into history directly. I would love to start because there are many things on the macro front that that I would love your insight on, as with everyone on the line.

00:01:48:12 - 00:02:05:11
Speaker 1
But just in terms of the very early days and I know it's a story old, but there is a particular question I wanted to ask with regard to your entrepreneur investment, and that was whether you had a mentor in those very, very early years. Well, yes.

00:02:05:11 - 00:02:40:20
Speaker 2
So he's looking he is looking over my shoulder. I'm May there you are. You see you see that sort of rather stuffy portrait. So that's my dad. So my dad was my mentor. So my dad was left school at 13, became what I call a sort of barrack room lawyer in the east end of London. My grandparents, his parents had come from, we guess, well, we think it was Kiev, Ukraine, pro-Russian.

00:02:41:07 - 00:03:16:22
Speaker 2
And my Zayda Baba, as we call them in Yiddish, settled in in Stepney in East London. And my my parents, my mother was the daughter of a Polish Romanian couple who came between the wars. My my father's parents came in 1899, couldn't speak a word of English. My grandmother's wedding certificate had four and two crosses on for Baba Rosita, and then the four witnesses were cross as well.

00:03:16:22 - 00:03:47:11
Speaker 2
So, no, you know, they were immigrants, which obviously is relevant. They wouldn't have gone in the Boris's point system. They wouldn't have got it Anyway. That was and my father left school at 13 because one of six they had to be income producing unit, went in, became a lawyer without qualification, defending I think, dubious East End Jewish businessmen and maybe women and probably men at that time.

00:03:48:18 - 00:04:19:27
Speaker 2
And then went into the radio and television industry, ran the biggest retail chain, 750 stores of its time. So like Dixon's or Carphone Warehouse of of that day and but was very wise didn't have a formal education and made sure I got one. So I owe him an awful lot for that and you know he probably live vicariously through me in that sense.

00:04:21:02 - 00:04:50:04
Speaker 2
But he I used to speak to him and this is not an exaggeration. This has been for mobile phones. I would speak to him five, six, seven times a day. During the hostile takeovers, so-called, of Gibraltar Thompson in 87 and Ogilvy in 89, he died in in 89. I would speak to him even in those deals lasted 14 days and 13 days and were pretty frenetic.

00:04:50:04 - 00:05:22:16
Speaker 2
But I spoke to him each day at various points in the discussion negotiation to get his advice. And I to your behind your question he's an important point, which is you need somebody you can talk to he who has your interests at heart and has no agenda. In the situation of my father that night I had a lawyer in New York, Phil Rees, who sadly died of cancer in the early part of this millennium around 2003.

00:05:23:06 - 00:05:47:27
Speaker 2
And he replaced my dad, but not, I think with the obviously the emotional. But he treated I mean, Phil treated me for reasons the lawyer treated me as though he had daughters and two daughters didn't have a son and I, I, I often think that the reason that he was so close to me when I was his biggest client, so that was a good reason.

00:05:47:27 - 00:06:10:29
Speaker 2
But it went further than that, much further and a very deep, deep relationship. And I think he probably saw me as sort of a surrogate son, I think probably or brother or whatever, and he was very valuable. But the point the point that you're asking about is really important. I think you have to have somebody that you can talk to doesn't have to have knowledge of what you do.

00:06:11:17 - 00:06:34:10
Speaker 2
I don't mean because my father had this because he was a retailer. He had an instinctive dev sense of people, their reactions. I mean, he was remarkable man, actually. I mean, I can remember many times I would talk about a situation and I was rehearsing a conversation I was going to have with somebody or something might be a negotiation, whatever.

00:06:34:20 - 00:07:01:04
Speaker 2
And my father was able, you know, he would give me a word. I remember I'll go into the detail. I mean, one particular situation where he gave me one word to put into a sentence that would trigger an emotional response or subjective response from the person that I spoke that word to and achieve a certain objective. And he was truly remarkable that, I mean, that you had an innate skill and I think my one regrets two regrets.

00:07:01:04 - 00:07:24:13
Speaker 2
One is I we tried to work together. It never worked out for reasons I really to this day didn't don't understand. And the second was he didn't have his own business because he was very entrepreneurial and he worked for somebody else. I mean, he ran very successfully. A big chain of stores was an industry leader in his particular industry.

00:07:24:27 - 00:07:35:13
Speaker 2
But I don't think he he he got the satisfactions that be that he should have done so that what I want is a man to implement this.

00:07:35:23 - 00:08:08:18
Speaker 1
That skill of understand how vocabulary and choice of words and diction can prompt reactions. And that was something that no doubt came in handy many times in your career. Just one point to to ask on some awesome with with that extraordinary background of of of your grandparents emigrating from Eastern Europe was there anything and what was your father was running the appliance stores was there anything that he impressed upon you as being particularly important in business, whether it was resilience or whether it was, I'm not sure.

00:08:08:18 - 00:08:12:18
Speaker 1
Was there something that that you remember as a life lesson?

00:08:12:18 - 00:08:36:13
Speaker 2
Well, yeah. I mean, I you know, he worked seven days. We literally we lived in we I was born in a place called Queensberry Court and this corner in the ghetto of north west London and then we, we graduated. We, we too graduated to Melville and he would travel from Mill Hill to Putney every day right across London.

00:08:36:13 - 00:08:57:09
Speaker 2
I mean, you couldn't do it now. I mean it would just take too long. You're tell about 4045 minutes, he would do it on a Saturday, a lower he would go off early on Saturday, like every day at 7:00, 730 in the morning on a Saturday a little bit later, 830 come back on a Saturday probably round four.

00:08:57:26 - 00:09:26:08
Speaker 2
Used to love watching wrestling fish make manners. Nobody remember who he was famous, wrestling. And and then on a Sunday he would do store visits and take and take down the weekly sales figures from the regional managers. And I, I would go visiting stores with him store sites, and he had no architectural knowledge whatsoever, but he used to design stores.

00:09:26:21 - 00:10:03:16
Speaker 2
He created flush so-called flush fronted stores which were instead of having a corridor between the two windows that you went down to get in the store, he had a wall of glass. It was revolutionary in its time. So opened up the whole store and made it much more consumer customer customer friendly. So I would go with him on on store visits, site visits, and I would see him, you know, on a Sunday, take him down by hand over the phone, the sales figures and comparing them to last year.

00:10:04:09 - 00:10:30:28
Speaker 2
And so he was always on it. I was the only child, so I spoke rigid. My mother was an impossible Jewish mother. You know, ever boastful to the chagrin and annoyance of every other parent She came into contact with. But, you know, it was because of my I had a brother who died. So I was you know, I was spoiled, rigid.

00:10:32:07 - 00:10:57:26
Speaker 2
My brother died at birth and I was really the last chance. And so my father sort of lavished time and attention on me. And then from an educational point of view, because he didn't have to leave school at 13, you know, he really wanted me. Yeah. I went to Haberdashers, which is a fine school, was known as a direct branch school, so a mixture of state pupils and fee paying.

00:10:57:27 - 00:11:28:14
Speaker 2
My parents paid £30 a term for my school fees, which in those days with a lot of money. So I was, you know, I was very privileged, actually not privileged, but my father was successful. I would say I was always described being described as from a middle class Jewish background in North London, north west London. I'm also sure it was a middle class, as people thought, because my parents scrimped and saved at the very beginning.

00:11:28:24 - 00:11:39:13
Speaker 2
But they were my father was more successful. You know, I would I had a a comfortable upbringing and got a superb education.

00:11:40:08 - 00:11:43:21
Speaker 1
I think. Safe to say you also inherited your father's work ethic.

00:11:44:25 - 00:12:04:23
Speaker 2
Yeah, I mean, I think I think I think you know, the answer to your question is I saw him work his tail off an interest. He worked his tail off for somebody else. So I said, you know, one of my regrets was he never had his own business. And I think he will be phenomenally successful and and I think that was the tragedy.

00:12:04:23 - 00:12:20:27
Speaker 2
And I you know, I saw him working like a donkey. He actually used the phrase, you know, often it was the donkey pulling the cart. And I and I think that probably grated with him a bit. I never really discussed it with him, but I think it grated with.

00:12:22:12 - 00:12:24:10
Speaker 1
The cart being what's in that case.

00:12:25:11 - 00:12:53:25
Speaker 2
Oh the, the business that was, it was a division. He ran these, these brands called Jan and Stone and Civic and Broad Needs me was an acquisition which is that it was quite you know was a big deal and it was a division of an industrial holding company called South Cleveland, run by my uncle, Sir Charles Heywood. And his son was so Jack Hay, they owned Wolverhampton Wanderers Football Club.

00:12:53:25 - 00:13:22:22
Speaker 2
Yes, they were. They were metal bashers for Wolverhampton and they had this retail division and my dad ran the retail vision and my one regret is he never really or one of the two regrets is they never got the shot. But he it very hard. It was 24 seven. No, not, not, not to the sacrifice of his family to my mother, myself.

00:13:23:11 - 00:13:25:22
Speaker 2
But he did work. He did work like a dog.

00:13:26:28 - 00:13:52:17
Speaker 1
As a fellow spoiled only child. I empathize with you, but the the if we may be those conversations that you touched on where you and he was speaking regularly several times a day in those big early M&A years that that's because after then there was an economics degree at Cambridge, HBS. You joined a marketing consultancy firm, I think called Track Glendenning, then a sports agency, then Saatchi Saatchi.

00:13:53:19 - 00:13:54:21
Speaker 1
Were you a good employee?

00:13:55:26 - 00:14:21:25
Speaker 2
Mr. James Gallagher I went to work for James Gulliver as his I was called Gramley personal financial advisor, but I actually carried his bag. I mean, you mentioned Tommy and John Brown, John of BP. They would call such people turtles. They had carried John Brown's back. And were you a good turtle? No, not that Well, I was okay.

00:14:22:02 - 00:14:53:21
Speaker 2
I mean, I looked after his investment. We had some fun, actually. We invested in a sweet company in Manchester called Tanner Rutledge, a double glazing direct sales double glazing company called Alpine Holdings. Then sales confectioners of Baker and Confectioners up in in Manchester. We had good fun, actually. Good fun, it was. And James, one of the investments was a golf in Compton, actually called Birmingham Crematorium.

00:14:53:21 - 00:15:20:27
Speaker 2
Pat MATTHEWS So nobody on this call? No, But he was a James Slater lookalike, ran a single first National Finance Corporation in the stock market. Booms. In those days, the Birmingham crematorium was a shell company. They injected Garland Compton, a UK advertising agency, into it. James knew the chairman, Ken Gill and Ken Gill wanted to get greater creativity in the Garland Compton.

00:15:21:17 - 00:15:51:01
Speaker 2
So they reversed the brothers Saatchi into into it and we started advising. Well, we advised Tavener and Sayers and Albert Holdings, well consulting contracts, and we got one with Morrison, Charles and that's, that's how I got to know them. And they look for a CFO. And the headhunters said to Morris that they tried to get the CFO from Fleet Street, but most of them were past about 11:00 in the morning.

00:15:51:01 - 00:16:16:05
Speaker 2
They were non compos mentis, if you understand what I mean. As Morris exasperated said to the head of the Brian Burwash was his name, Gordon Rogers said, Brian said to him, What do you want, Morris? Morris said something like. Martin. So Brian said, Have you asked Martin? And Morris said, No. Why do you ask it? And that's literally how it.

00:16:16:27 - 00:16:41:07
Speaker 1
And and person she was. So it was 85. He started wine and plastic products as it was as it was. Yeah. So perhaps the question I'd love to ask first on the on the WPP journey was when you look at your own evolution as a as a leader and as a CEO, how was the 1985 license so different in style to the 2022?

00:16:41:07 - 00:16:51:14
Speaker 1
Martin Sorrell Running As for capital, were there traits that you remember in those early days running your first business that were different?

00:16:51:14 - 00:17:28:12
Speaker 2
Yeah, I hate I hate to pontificate or, you know, I can't stand these sort of sort of lectures on what, what, what's good and what's bad. I mean, you know, I can describe what I did that I don't know whether it was good or bad. So with that caveat or health warning of I mean, with obviously you get older, you get more experience, some insights on the experiences, experience of good things and some of that experience of bad things.

00:17:29:11 - 00:18:02:25
Speaker 2
You know, we're going through probably the most difficult period economically we could have gone through since World War Two. And I'm I'm 75 and I put my head out of the womb in February, on February the 14th, 1945, at Queensboro Court in northwest London, just when the war was ending. And I got a headline in my study, Daily Mirror, from that day, and it's headed mumsy times for the last line.

00:18:02:25 - 00:18:28:22
Speaker 2
So Montgomery was was crossing into Germany at that time, and so the war was over. But, you know, the nearest and now the nearest analogy to what we're going through at the moment is wartime. It's not 911 or dot com bust or the great financial recession or 9192. The oil price, it's this is totally different. This is this is like wartime lockdown.

00:18:29:03 - 00:18:55:19
Speaker 2
And you know, as I think back, I mean, I was obviously younger, less experienced, same motivations. You know, when you get knighted, you go to the Royal College of Heraldry, which is an interesting experience in and of itself, because you go back to the Battle of Hastings and you see all these shields and but they ask you to come up with a motto.

00:18:55:20 - 00:19:33:26
Speaker 2
And my mind, translated from Latin is plus persistence and speed. And, you know, if you ask me, what's the difference? What's the similarities? I mean, I think the seriousness of speed were probably the same when I started with Maurice and Charles in 75 or 76 and 77. And, you know, I think one of the great things about Saatchi in those days, Maurice Maurice is favorite quote or Charlie's favorite quote was nothing is impossible.

00:19:33:26 - 00:20:07:03
Speaker 2
So I think and around that was you know, if you're if you're persistent about something and you know, quick, you make decisions quickly, you know that will get so you know some of the basic characteristics probably haven't shifted. My style may be different, but that's for others to judge. I you know, I'm not going to write a book about management pontificating about what I did and how brilliant it was or what I did and how dreadful it was.

00:20:07:24 - 00:20:48:23
Speaker 2
And it's for others to judge. Yeah, I don't think the styles have changed that much. I mean, the execution, the models have changed. I mean, the model that we established at WPP, which others, you know, I can't claim to have created the earnout. That's rubbish. You know, I. Yeah, but that's nonsense. I was credited with boss shaped economy and I made the point that was, you know, David Clemente or the the deputy governor of the Bank of England who admonished me for crediting him with it.

00:20:48:27 - 00:21:12:23
Speaker 2
He wrote me a note saying, you know, you shouldn't do that. So so I have to claim author or authorship or, you know, frenemy. That was a very bright young woman who was a fierce graduate, is working for me. And on the fellowship was a fellowship program, the WPP Fellowship, which they've now. But she gave me the the front of me thing.

00:21:12:23 - 00:21:55:24
Speaker 2
So look, I think styles matured, but I think the fundamentals are pretty much the same. I would say, you know, we've we've got this tagline for as for faster and cheaper or speed, quality value and certainly, you know, the persistence and speed is a positive that I do think rapid decision making. You know, if I say if somebody asked me a question for review and I don't have the answer or not the answer, but an answer that I think is the right answer is because I don't know or I'm uncertain.

00:21:55:24 - 00:22:35:18
Speaker 2
You know, I, I really don't think, you know, we don't run complex businesses. I'm not been involved in, you know, the oil industry or complex manufacturing or whatever. And maybe I'm lucky because decision making is relatively simple. It's not too complex or is something. But I do think rapidity and response, if I don't know if I don't give you an answer to something, is because I don't know or I'm worried about the consequences of the answer.

00:22:35:18 - 00:22:36:10
Speaker 2
I want to give you.

00:22:36:12 - 00:22:57:22
Speaker 1
Perhaps just to tie those two points, the rapidity and the enormity of what we're going through now with that historical lens that you that you lend to us. Well, first of all, something that I think the questions on lots of people's minds is, is given governments are now in huge debt. Do you have a sense of how that debt is repaid?

00:22:57:22 - 00:23:00:05
Speaker 1
Does that is that something that worries you? It is.

00:23:01:02 - 00:23:28:24
Speaker 2
It worries me enormously. I'm 75, so I've probably got another 15, 20 years left in me of which say say, let's say half, let's hope. And I've got I started as for two years ago, a little under two years ago, and I said I have a five year run. And then at the end of five years everybody thought, you know, I should continue.

00:23:28:24 - 00:23:53:16
Speaker 2
And I was physically and mentally able to do another five years. So, you know, ten, 15, 20 years. I mean, I think this is an inflection point. I mean, you your so my view on COVID is it's going to be more V-shaped than people think out of this. There will be L's that will be used, there will be WS, there will be chair shapes as well.

00:23:53:23 - 00:24:33:03
Speaker 2
But it I prefer the probably reverse square route where in a warp speed decline won't fade sort of up, but then it flattens off and a level below where you were before. But there were a couple of things that really worry me. Firstly, the the inequality between within countries, which is driven populism and the rise of populism. So I mean, a lot of this thinking comes from Ray Dalio, the you know, the super fund guy.

00:24:35:00 - 00:25:07:24
Speaker 2
So that's one one area. And then then also the inequality between nations, you know, can India and Brazil. On our call today we were discussing Brazil and you know, management. Paul and Bolsonaro, you know, his father is second health minister and the third one, and they're not doing anything. It's chaos there. And, you know, India well organized, but, you know, we again, we on the call were were are Indian people and they're worried about what's happening in Mumbai, etc..

00:25:07:24 - 00:25:36:04
Speaker 2
So the inequality issue, the the other big issue that really worries me and you know, of the on say, climate change is US-China relations. I mean, that's the fundamental that's the biggest problem in my view, pre-COVID. That's what they should have been discussing at Davos, along with the virus. Climate change is as important, maybe more important in some in the longer term.

00:25:36:04 - 00:25:43:01
Speaker 2
But US-China relations, that's the the big issue. And then come to the point.

00:25:43:05 - 00:25:47:27
Speaker 1
What's been your assessment on that when you've watched the dynamics between China? Well, we.

00:25:48:08 - 00:26:18:14
Speaker 2
Know we have to We have to figure they're not going to go away. You know, this is the Ray Dalio point about reserve currencies. So he has a great graph showing the Dutch guilder rising and falling, the British pound rising and falling, the American dollar rising and coming down and the R&B on the by the way they asked me to on is a guy who was also on the op because, you know China has been on the wrong side of history for 200 years is now on the right side.

00:26:18:20 - 00:26:43:28
Speaker 2
The Chinese are not going to go away. So you have to work out some way of working with them. You don't withdraw, you know, and it's not just Trump's fault. It's Obama's fault, too. He withdrew. And absent American influence, the more you withdraw, the more the Chinese fill the vacuum. You know, I went last year for the first time to Pakistan and Nigeria.

00:26:43:28 - 00:27:09:16
Speaker 2
In both those cases, you know, I learned one of the questions that I ask is, who's the biggest FDI investor? China? This is an inflection point. Ever since the eighties, the Reagan Thatcher eighties, capital as a proportion of GDP has gone like this. And labor is, of course, going like this now with what's happened, how the hell are they going to pay for?

00:27:09:16 - 00:27:28:28
Speaker 2
Well, they can they can print money, but then will will end up at some point in time with inflation being a problem, then the the proverbial will really hit them that what is more likely, despite what they all say, that we're not going to raise taxes. And you hear that from Boris and everybody, you hear that from Trump.

00:27:29:22 - 00:28:07:14
Speaker 2
What how are they going to do it? How are they going to do it? You know, it is they say the answer is a growth in the economy. Well, that may not be. I'm more optimistic on certainly certain views in certain verticals like tech and areas related to that. But how is going to be raising personal taxation and raising corporate taxation So I think this is not from the in the future, it's not going to be a golden age or as golden age as it was for capital.

00:28:08:02 - 00:28:28:21
Speaker 1
With that redistribution of of of wealth. Do does big tech Facebook or Google with many parts of the economy and seizure at the moment, those advertising driven business models they do do they share the pain as well in the coming years or you think big tech is is safe is immune?

00:28:28:26 - 00:28:56:03
Speaker 2
Nothing is safe and immune because there's always those two people in a garage somewhere with Bangalore or San Paolo, as well as Silicon Valley or Silicon Fang or Silicon Roundabout, whatever it happens to be, there's always going to be that risk. But the simple answer to your question is Apple, Amazon, Facebook, Google, in which Scott Galloway, Galloway, Christians, the Four Horsemen, and I call them the seven assistance sets.

00:28:56:21 - 00:29:27:00
Speaker 2
It's those four plus. Yeah, Microsoft, Bose, Apple, Microsoft, Google, Facebook, Amazon, Tencent, Alibaba, tick tock that those six platforms plus Apple and Microsoft and call them the Magnificent Eight or whatever you want to call them. But I used to call them the Seven Sisters. That was excluding tick tock because there was an analogy in my mind to the pressure that they will be put on them.

00:29:27:05 - 00:29:52:29
Speaker 2
Now, four of them, I think it is. It got over $1,000,000,000,000. Amazon is trading must be about 1.4 trillion. My view is it will get to 2 trillion fairly quickly, which Scott Galloway also predicts and I mean, I've got to tell you, the reason why I think they'll do that is, you know, I have some contact with them and I'm amazed.

00:29:52:29 - 00:30:22:18
Speaker 2
I mean, all is the same thing goes for Google and Facebook, Alibaba, Tencent, their ability to turn on a sixpence, the agility they have is huge. That is the biggest asset any company I think can have agility, flexibility, responsiveness. It's related to speed. And Amazon is incredible for a company that is the most valuable company on the planet.

00:30:22:18 - 00:30:44:27
Speaker 2
They will hit 2 trillion, I'm pretty sure. But you know, Lloyd Blankfein, I think it was you said was asked that question. Now somebody has got Apple or whoever it was went through a trillion firsts. What happens when will will be the first to get to 2 trillion and Lloyd's then I don't think any nation state would allow a company to get to 2 trillion.

00:30:44:27 - 00:31:15:07
Speaker 2
And when you think about GDP, you know, the UK is 3 trillion or whatever it is, Germany three and a half trillion. And so you're talking about some big brothers here. And that was Lloyd's point. I think Amazon will will do it. Now, even if they got broken up, you know, an AWB was a separate company. There might be some it just economies breaking out but they'll be very powerful companies on their own.

00:31:15:21 - 00:31:43:12
Speaker 2
My view is that, you know, the couple of things going on, the demise of third party cookies, which Apple has executed immediately on its hardware and Google is doing over the next two is less than two years now. But they said over two years that's going to push Google backwards a bit. But it's going to push all our clients back to Google.

00:31:43:18 - 00:32:12:14
Speaker 2
I mean, the first party data signals, so they've got their own first party data. They get the signals from Google and Facebook and Amazon and everybody else, the nixing of third party cookies. It'll have some good features to it. It'll eliminate a lot of fraud. I think in the digital ecosystem. It'll knock out on the on the bad side and knock out some publishers who are reliant on third party cookies in one way, shape or form.

00:32:14:10 - 00:32:51:23
Speaker 2
It'll help them privacy, which is other good news, but ultimately it will push it back on Google. The other thing that Google and Facebook have to whether and we have you know, I was a little bit surprised that in the analyst calls on Q one there was no questioning the platforms on this is their reliance on SMB used an SMS or SMS for advertising because of that of Google's 160 billion of ad revenues of Facebook 65 or Amazon's 20 or even tick tock seven left.

00:32:51:26 - 00:33:20:21
Speaker 2
So it ticked off a significant proportion. Probably about 60% comes from SMS. So small businesses are, you know, a significant part of their revenues If they go down, which it looks like there will be significant bankruptcies of those sorts of businesses, that gets them in the short term. But in the longer term, I don't see anybody taking them off on or out.

00:33:21:16 - 00:33:41:05
Speaker 2
The only the only platform that's really got scale in the last couple of years has been tick tock, which as I said, seven. My downs is at 20 I think and tick tock is seven of that. Otherwise, you know, SNAP has done very well. We have a great relationship with SNAP. We think they're very potent, but it's 2 billion.

00:33:41:25 - 00:33:49:05
Speaker 2
We do it under a billion. I mean, they're small in comparison. So net net, the strong are going to get stronger.

00:33:49:24 - 00:34:13:01
Speaker 1
Okay. Thank you. And we have I know already some questions on new platforms from from Nick Reid and questions from Mr. Dyson, Stallman and several others. So I'll turn to questions very shortly. So, Martin, one question on the nature of advertising and advice. Apologies. I ask as as a layman in the advertising world, but and I hope it doesn't fall in that quantification bucket.

00:34:13:16 - 00:34:25:06
Speaker 1
But but what what what what is it about human nature, do you think that responds to advertising even when we know we're being sold to emotion.

00:34:26:04 - 00:34:59:27
Speaker 2
Emotion. But, you know, you and everybody in our industry harks back to well, effectively harks back to Don Draper the way you elicit an emotional response, you know, stimulus and response, the way you elicit that response is not, you know, emotion can be developed from data. I mean, there is no I don't see it as antithetical on the opposites.

00:35:00:09 - 00:35:23:07
Speaker 2
You know, a lot of people in our industry look at it with rose tinted spectacles, for example. I was I was actually shot around. So I won't say who it was, but there was a tech leader of a company at a dinner and a guy who'd been in our industry for a long time. And this this tech company didn't take advertising.

00:35:23:07 - 00:36:13:24
Speaker 2
It works on subscriptions. And he said, and the guys from our industry said, you know, the way it used to be in the old days that the ads were better than the programs. And now, you know, the ads are terrible. And and I disagree totally. I disagree totally with that. I think that is just looking back with rose tinted spectacles to the past, That's that's a killer reaction in my view can kill a comment in my view, because what we do nowadays to to get that emotional response which will fulfill a need or fulfill a desire or whatever it happens to be the way we do it, we refine it much more effectively than we

00:36:13:24 - 00:36:57:22
Speaker 2
ever did before because we have more information. And information is powerful, and more information enables us to craft messages and to craft the big ideas into messages in a more effective way in far, far more fragmented channels. It's true, but with much greater choices. So in our model, as for which we call the Holy Trinity model of first party data driving the creation of digital advertising content and programmatic boosted by data and analytics, I think is a far more effective model.

00:36:57:28 - 00:37:21:24
Speaker 2
The fact that it uses technology, the craftsman, you know, there is this terrible thing inside our industry about the difference between art and science. I mean, in a funny way, you see it in this inchoate, you know, with this clash between the politicians and the scientists, in a way, it's a sort of, you know, just sitting and thinking about it.

00:37:21:24 - 00:38:02:10
Speaker 2
There is no science. I have a close friend who's a very prominent medical adviser, and he says, you know, it isn't science really. It's interpretation of science. I mean, the advice that scientists give to politicians is really based, you know, these famous imperial models or imperial college models, wherever they came from, you know, which were taken as when when Boris and Dominic Cummings or whoever it was took the decision to lock down because 200,000 people might die.

00:38:02:28 - 00:38:35:24
Speaker 2
Now, people are now saying that model may not. I think it was that model may not been as well honed, thought through and produced well. So opinion, you know, you have to use judgment. It's not only is facts and it suddenly turns into ice cold analytical framework, it doesn't you still need your intuition and judgment to interpret the facts and craft it into a message or craft into response to COVID, where it happens to be.

00:38:35:24 - 00:39:04:09
Speaker 2
So but the thing I know it's me and I'm 75. The thing that really annoys me is that everybody harks back to everybody. Many people hark back to the good old days, the good old days. What? The good old days. Today's today's better. It's it's just we have very much more sophisticated tools to enable us to come to better judgments.

00:39:04:09 - 00:39:12:26
Speaker 1
I think one no question that was it had to be heavy political and economic overlays and judgments to the scientific advice given for COVID.

00:39:13:00 - 00:39:48:09
Speaker 2
The government knew early on that if you applied the the Chinese mortality rates to our population, that if you let it rip down the herd immunity route, you risked 300000 to 500000 deaths. They knew that, but they pursued the herd immunity route up until the middle of March or when it was when this guy walks in, whoever it was with the model and says, Oops, we could have 200,000 deaths.

00:39:48:16 - 00:40:34:19
Speaker 2
Then they reversed that position, but they knew it. And the thing that the thing that gets me is all these decisions, not all of many of them are taken because people are frightened of the royal commission. They become super cautious because they're worried about investigations, commissions, whatever, because we all know that after and if we can get out of this, whether we do it, then there will be shitloads of inquiries in every country about why this happened and why did the Germans apparently manage to handle it better than we did.

00:40:34:19 - 00:40:57:09
Speaker 1
And now turning over to Q&A, we have we have a flood of questions coming through, some good some COVID related and lockdown related and others not. We have some place I'll come to you in just one moment, Marine Malik Matt. So once you ask that, I'm going to unmute you and hopefully you can hear us. Esther, very nice to have you.

00:40:57:16 - 00:40:58:11
Speaker 1
How are you?

00:40:58:11 - 00:41:01:13
Speaker 3
Thank you. Very well. I just wanted to ask, Sir Martin.

00:41:02:26 - 00:41:03:16
Speaker 2
It's sort of.

00:41:04:20 - 00:41:18:03
Speaker 3
Personal, but not invasive. QUESTION just what is life like for you, that jet lag and what have you learned from living in quarantine that surprised you? I learned how to cook for example.

00:41:18:03 - 00:41:19:02
Speaker 2
And set off.

00:41:19:02 - 00:41:19:27
Speaker 3
A fire alarm.

00:41:19:27 - 00:41:42:12
Speaker 2
So well have set off a fire alarm. The best thing I was good at cooking was an egg. I could just about boil an egg for before lockdown. I can now. I can now. I bought a fish pocket basket a Weber. I have to say, whether we want to, whether fish basket. And I'm very good at barbecuing fish, very good.

00:41:43:03 - 00:42:13:15
Speaker 2
Excellent turbot and wild sea bass. So I can cook a bit faster. I can also do a bit of cleaning around the house. I can operate a washing machine now and and a dishwasher. But I'm absolutely lost if they if they fail to operate because I can't you know, I can't screw in a light bulb, let alone anything else on, on travel.

00:42:13:27 - 00:42:45:12
Speaker 2
I mean, I think I would be more efficient coming out of lockdown. I my time as you well know, Esther, because I've known you for a number of years and you are the you're even worse than me. You're ten times worse than me. You travel. Travel like a maniac. And I think I now think much more carefully because, you know, I've come to realize and actually realize this before, obviously the most the most precious commodity we have.

00:42:45:12 - 00:43:11:10
Speaker 2
And that's time. And therefore apportioning your time between, you know, your family, what you do, and society being the three major buckets, in my view, how you divide your time and and, you know, they all impinge on one another. And frankly, I think we were all guilty. This we used to travel at the drop of a hat and I don't think I will do as much of it.

00:43:11:10 - 00:43:35:00
Speaker 2
It's not it's not because of fear of infection and all that. I think that probably plays some role in it, but it's because we wasted so much time. I mean, I'm much more efficient during lockdown started eight in the morning, finished at about eight or nine at night. And you know, it's one thing call or or phone call or whatever it is after another.

00:43:35:00 - 00:44:28:27
Speaker 2
No breakfast, no lunches and dinners, wasting time traveling. So it doesn't mean I'm not going to travel. I will travel a but it will be much more carefully judged, at least for a period of time. And the technology is really good. I mean, we have a 100 and whatever on. I was on a call with HBS alumni. I think there were 2000 people on the call and we did a the Chilean mining crisis with a couple of professors, and it was super staff or the Bloomberg Philanthropies call with the mayors, 18 mayors from 80 cities with HBS professors, John Hopkins professors, Kennedy School professors, I mean, super staff.

00:44:28:27 - 00:44:54:08
Speaker 2
And the technology is not new. It's been around for a period of time. So I'm going to use the technology much more. I'm not going to fly to Australia. You know, if I if it can be done. That's the one thing that is sort of interesting that has come up recently, that we have a feeling that it's much more difficult for obvious reasons.

00:44:54:19 - 00:45:25:20
Speaker 2
It's not not there's not brain surgery to establish differential contact, say, in pitches and present operations online. So we're having to think through how we use technology in more effective ways to establish some sort of interpersonal connection, which obviously a face to face or eye to eye meeting is much more capable being. I mean, somebody said to me, would I house somebody on Zoom?

00:45:26:12 - 00:46:00:00
Speaker 2
And the answer is I get the answer yes, if I knew that person, if I didn't, I would try and obviously investigate research that person. But would I do it? Yes. Would I deal with a deal by Zoom? Probably not. I probably wouldn't. But, you know, we are doing stuff. We will announce something, a small thing shortly. And we have a number of different things which which we've done.

00:46:00:20 - 00:46:32:27
Speaker 2
We started it before COVID. So we know the people, but we've executed it. And so what was interesting was we just got a flavor that put it another way, procurement and statistical stuff has actually sort of upped its game to COVID because it, you know, that analytical part has become probably more the numbers palms become more important. And the human side of this, the obvious reasons has become less important.

00:46:32:27 - 00:46:46:19
Speaker 2
So we have we're figuring out how could we do things technologically that will stir the heartstrings a little bit more. I'm getting back to Spencer's question about how how do you advertise effectively is the emotional side to.

00:46:46:24 - 00:47:06:19
Speaker 1
We've we we signed our first time chief co-founder that we hadn't met in person this morning had for the last few weeks. Esther, thank you so much. Really appreciate it. Thank you. We have Tom, if you can hear us, Tom Kloza, anyone familiar with CEO of Thomson Reuters and on the Morgan Stanley Board. Tom, hopefully you can hear us loud and clear.

00:47:07:02 - 00:47:10:15
Speaker 2
I can hear you well. And Michael, actually.

00:47:10:15 - 00:47:11:20
Speaker 1
Loud and clear.

00:47:12:15 - 00:47:22:27
Speaker 2
I thought the description of childhood was actually quite touching. I've often struggled with trying to come to terms whether my spoiled childhood was.

00:47:23:07 - 00:47:35:05
Speaker 1
Middle class, upper middle class or something else, but it was not that dissimilar. I was happy that Spencer left out the the other board, the previous board.

00:47:35:10 - 00:47:41:02
Speaker 2
And I was going to remind you, I was going to remind you of that since I really looking forward.

00:47:41:02 - 00:47:49:27
Speaker 1
To getting back on a plane, going to Paris and saying. MARTIN Sir Martin advises us to do the following.

00:47:50:26 - 00:47:51:04
Speaker 2
And.

00:47:51:25 - 00:48:17:23
Speaker 1
I'm perennially interested in these scale questions in advertising. It always seemed to me that the best creative got done at smaller boutique size. You brilliantly created these sort of synergies of media buying at scale. Do you still see a role for large advertising holding.

00:48:17:23 - 00:48:18:12
Speaker 2
Companies.

00:48:18:12 - 00:48:20:22
Speaker 1
Or is that a now passed.

00:48:22:06 - 00:49:07:14
Speaker 2
No simple answer? No. The day has passed and passed this sell by date. Now, part of the reason, Tom, is, is I mean, I think there are good creative assets, digital creative assets in some in some of the holding companies. I think the traditional creative has passed its sell by date. Seriously. I mean cost structures. You know, if you went to the next Progress Board meeting and asked what are the creative directors in traditional advertising agencies paid in New York, you'd probably be told get paid $1,000,000 based and let's say another couple of million dollars in costs around them.

00:49:07:23 - 00:49:38:28
Speaker 2
So total 2 to $3 million. And the traditional creative business has been declining, as you know, as a proportion of the total. And in absolute I would rather like sort of free to air or newspapers or serious newspapers, but it's been declining for a number of years. Does that creative director reduce his or her compensation from 2 to 3 million to 1 to 2 or half to one and up?

00:49:38:28 - 00:50:03:10
Speaker 2
No. On the other side, the digital creative director, if there is an equivalent, is paid 255,000 costs of all up one and a half. And the revenues on the digital spy on average, you know, we grew last year from a small base 40 to 45%. This year we budgeted 30. You saw in the two one we did about 20 a touch by Kogan but we did well.

00:50:04:03 - 00:50:31:04
Speaker 2
You know, is the digital agency increasing it to create his or her compensation by 20% to reflect that the answer is not so you get these imbalances that's number one. Number two, on the media side. Digital media is about brains, not for the traditional media, which we do nothing of is for, and I have no intention of doing it.

00:50:31:27 - 00:50:57:06
Speaker 2
Traditional media is based more on brawn and and using that brawn to leverage for the client's benefit. And I guess to some extent the holding companies benefit. I think those days are rapidly disappearing too. So the answer and I was talking to an analyst before I got on this call is looking at this strictly issue. The answer is breakup.

00:50:57:15 - 00:51:35:07
Speaker 2
I mean, if you look at me, market value publishers or WPP or even IPG and Omnicom, which appear to be doing better, I think probably because they're based in the US and the US is still the the biggest and under Trump has become even more important relatively, I think, for businesses such as. So, you know, you got Publicis running from Paris and you got WPP round, you see contain the house with vast bureaucracies at the center, you know, being built in h.r.

00:51:35:07 - 00:52:03:19
Speaker 2
And i.t. New business which duplicates it. What's going on in the brands. So this is the classic conglomerate. You know, I used to rail against anybody called wpp a conglomerate, but you now got the classic conglomerate discount. The days when I was in business school, it was about how Janine's AT&T and Jimmy lings link took over, which probably nobody on this call can remember.

00:52:03:19 - 00:52:34:09
Speaker 2
They're not ancient enough to remember that. And that was the same thing. You know, they were built rapidly through acquisition and they they lived a they looked at a certain age and then they were past the sell by date as conditions changed. And there is now a conglomerate type discount on Publicis or WPP. I think the break up value of WPP, if the stock is trading at almost £6, the breakup value is going to be double that.

00:52:34:20 - 00:53:08:04
Speaker 2
Go to me. Yeah, I can run you through values. The group and and Ogilvy and Wunderman, JWT and VML and our and HQ and everybody else. It would take you well past the market value. So if the Board of Publicists, Tom, to be blunt, want to do do something and they should break it up. Whether Madam Dentaire and Maurice Levy, to be blunt with you also would let that happen is another question.

00:53:08:04 - 00:53:08:14
Speaker 2
So.

00:53:09:11 - 00:53:29:06
Speaker 1
Tom, thank you very much. Thank you. You have you have the message for the board loud and clear that the owner of a holding group, but not an advertising one, Matthew Stoneman, for those that know, is founder and CEO of 2020 Group, which owns about 20 companies across film music, etc.. It's nice to have you. How are you doing?

00:53:29:27 - 00:53:30:21
Speaker 1
I'm very good, but.

00:53:30:21 - 00:53:32:01
Speaker 2
Actually the major part.

00:53:32:01 - 00:53:34:00
Speaker 1
Of our holding is up, which is.

00:53:34:00 - 00:53:36:00
Speaker 2
Why Hence the question.

00:53:36:13 - 00:53:57:14
Speaker 1
To Martin. And we do advertising in various advertising entities, production entities. So we're small compared to 224. And I'm also an investor in for us at the same time, I wondered, Martin, if if you think there's any prospect that there might be a tipping point with as for where companies feel.

00:53:57:14 - 00:53:57:28
Speaker 2
The need to.

00:53:57:28 - 00:54:10:16
Speaker 1
Be part of the yes for group because because of its unparalleled strategically integrated offering to brands and if so, a, when and B, what are you missing in that offering?

00:54:11:25 - 00:54:13:04
Speaker 2
Are you signing up, Matthew?

00:54:13:28 - 00:54:14:16
Speaker 1
Well, maybe.

00:54:16:14 - 00:54:44:25
Speaker 2
If I zoom it yeah fine we we can fixes are well look, obviously I'm subjective about these things. You know we have four basic principles as I think you know, Matthew number one is we're purely digital. So we're focusing on the growth part of the market. And that was a critical thing. I mean, it's related to a lot of the questions that Spencer said when I left WPP, I decided that growth was the key.

00:54:44:26 - 00:55:11:17
Speaker 2
But hitherto, you know, it had been around globalization. So such as was about globalization. WPP was about the continuation of globalization and the beginnings or the foothills of technology. And what S4 is about is, is about technology. I mean, for example, we're in 30 countries. We want to be in Germany for various reasons, but that's it, 31 countries.

00:55:11:21 - 00:55:37:03
Speaker 2
We may do one or two more, but we're not going to 113 countries. We haven't spent this much more effectively and we have global coverage already. So number one, focus on digital. Number two, the Holy Trinity, the first body data driving the development of digital advertising content and programmatic and data analytics. Number three, faster, better, cheaper or speed quality value faster is about agility better.

00:55:37:03 - 00:56:17:18
Speaker 2
It is about understanding. Those 16 companies are the eight I mentioned, plus Oracle, Salesforce, Adobe, IBM's IP five down some already, including through TikTok by the Twitter snap, Pinterest. You could grow maybe a little bit more Samsung in, you know, these are the companies you really have to understand the part of the digital ecosystem and cheaper or value is about efficiency which is not in the the ZBB, the zero based budgeting sense anymore because that's a little bit discredited now get more out of the Coty product, etc..

00:56:17:26 - 00:56:44:21
Speaker 2
But efficiency is still coming out of COVID 19. Efficiencies are going to be more them faster, better, cheaper, which people are room for in our industry. And the same people have the right to spectacles for room credit going to become critical. And the fourth fundamental principle is a unitary structure. No fragmenting. I announced, you know, if you wanted to join us, my theory, the first thing I would say is, look, if you want to sell your business, we're not right for you.

00:56:44:27 - 00:57:33:02
Speaker 2
I'm not going to pay you the top brick of the chimney. But if you want to build a new era, a new age model that disrupts the old and and that's what binds us together, the group of people that S4 is is creating that new model. And and at the same time disrupting though there is a little bit of you know, some of the people on this call would know this that when the media independence were formed in the nineties one of the reasons why the the Grow Brothers in France Y Michael Kassan and Denis Holt started Western International, why Chris Ingram started CIA was that they were so upset with the way they were

00:57:33:02 - 00:58:03:25
Speaker 2
treated in the advertising agencies. You know, the creators were all dominant and they wanted to declare you the and go off on their own and do it well. It's the same in a way, in the production and the business and the digital end of the business. I mean, you know, the it's the upstairs downstairs with the people downstairs now climbing the stairs and the digital is 45% or whatever it is of the industry we project.

00:58:04:11 - 00:58:29:13
Speaker 2
So it's fallen by 50 billion to 600 billion freak over it. Maybe post-COVID will be 505 50, something like that. Maybe even less digital will go from will rise as a proportion. It'll go from 45 or 47 and a half where it is now percent to, we think well north of 57, probably 57, not by 2022 23 we think.

00:58:30:17 - 00:58:58:06
Speaker 2
We think COVID accelerates digital. The digital acceleration is at three levels consumer because we're educating, we're shopping, we're communicating online at media, you know, newspapers going out of business, free to air under pressure to the streamers starting to dominate. And lastly, but not least, enterprise managers who are scared to upset the status quo, the status quo to upset anymore.

00:58:58:06 - 00:59:23:13
Speaker 2
So digital transformation will accelerate. So all this is going to build momentum to your business and, to us. So I think, yeah, I don't know whether we've hit the tipping point or whether we will because, you know, we still have a long way to go. We just at the beginning of the journey. But I do think the momentum is with us and it was really interesting.

00:59:23:13 - 00:59:57:04
Speaker 2
If you track and we're only smaller, you know, billion pounds company, 1.1 billion company, but if you track our share price, it has more correlation to the tech companies than it does the other holding companies at holding companies. Since we started S4 you we're we've gone from 113 up to 220 or whatever it is, to 30 tonight. Over that same period.

00:59:57:04 - 01:00:39:04
Speaker 2
You know, Google and Facebook and Amazon have done well. But the holding companies WPP, Publicis, Dentsu are off 5045 but 50 55% IPG and Omnicom are off 2525 to 30% have actually decided Vivendi is the best performer actually up about 10%. So we track more particularly. Is it really interesting you track your back. The last three or six months, we've tracked more to the tech companies than we have to the ad holding companies.

01:00:39:04 - 01:01:25:23
Speaker 2
And the reason is 53% are cloud based is that when spreads went through our clients, our biggest client is Google. Next biggest is a telecom company, which we have in India. But you can guess who it is. And so one is Facebook and then there's Netflix and there's Uber and there's PayPal and there's a service now. And this so far, I mean, our tech capability is disproportionate because, I mean, there's BMG and there's Nestlé and there's Mondelez and this Coca-Cola and there's Baron, there's there's Sanofi and there's WBA and there's Ace Hardware, there is Best Buy.

01:01:25:23 - 01:01:53:22
Speaker 2
So it's a good spread, but it's well over 50% is tech. And, you know, coming back to the faster, better, cheaper thing, it's much easier to deal with people who are looking at the sky and are not constrained rather than those people looking at the boots. Facebook at the moment, in my view, is quite extraordinary. I mean, they are embarked on expansionist tactics.

01:01:53:22 - 01:02:20:28
Speaker 2
You know, they have they buy 10% of Jio in India for 6 billion. They launch a corporate campaign, which we didn't do, which Droga5 did at Accenture, which I think is an excellent campaign. And you know that suspense, spend this question about emotion and it's going I think it's well-thought through campaign. And they're developing their zoom equivalent. I mean, they're they're not looking at their boots.

01:02:21:05 - 01:02:55:02
Speaker 2
They're looking at the sky. And I and I think the tech companies, Google and Apple are working on tracking and testing. You know, I mean, the tech companies are doing doing some really interesting things. Amazon investing 4 billion after Q1 in various things. 1 billion of it apparently is going into COVID 19 tracking, testing security techniques which the licenses software for or hardware and software for other companies.

01:02:55:14 - 01:03:21:25
Speaker 2
So creating revenue stream, these companies are, you know, the regulators obviously looking at them intently. But my God, they're good at what they do. So I'd rather look at them as a Come back to your question, Matthew, I mean, there are three criteria that we look at for deals. One is top line growth. Two is margin. We're not we're not prepared to sacrifice margin.

01:03:21:25 - 01:03:43:28
Speaker 2
We want profitable businesses with decent margins around 20%, even at the central cost. And last but not least, I don't want to be in a position where we're technologically disintermediated. I don't want to be I don't want to be vulnerable as best we can so we're not interested in at table MarTech. We want to be part of the service.

01:03:43:28 - 01:03:57:00
Speaker 1
The very last one. And Matt, thank you for that. Question. You talked about disintermediation and new platforms a little bit earlier. One final one for Maureen Malik related to Tick tock. Maureen, hopefully you are unmuted.

01:03:58:06 - 01:04:25:06
Speaker 3
Hi, Sebastian. I'm very interested in Chinese technology companies and Chinese platforms, so I have two questions for you. So in China, we're seeing the rise of Chinese platforms that work between generations. So the Sharron Angle, which talks to the so-called silver hair economy, there's Bilibili, which really talks to Gen Z. So my question, my first question is how do we use engage with these platforms?

01:04:25:06 - 01:04:51:07
Speaker 3
Because I often find when I travel to China and I learn about these platforms, they don't have that much Western engagement, but also how do we reconcile a very patriotic Gen Z on Bilibili with all views? And then my second question was I saw a very interesting statistic recently that Tik Tok makes up 25% of Facebook's advertising revenue, and that's begun to be paid back.

01:04:51:28 - 01:04:53:28
Speaker 3
Where do you think that will leave Facebook?

01:04:55:15 - 01:05:32:15
Speaker 2
Facebook obviously has had a difficult and difficult time because, you know, it was described and to your point about, it was more silverhand than it that it should be. You remember when SNAP came on board and that went through when it was originally floated, it went through a fairly rocky time because Facebook imitated brilliantly imitated what Snapchat and SNAP started to carve out a better position for itself now.

01:05:33:06 - 01:06:08:09
Speaker 2
But you know, it hasn't done it on that scale. I mean, the simple fact is the stats. Last year I think they did one and a half billion in ad revenues. I think they were forecast pre-COVID to do 2.4 this year. So very significant growth rate. But in in Campari's in to Amazon, which is running a 15 to 20 billion annual run rate and tick tock at seven, you know, it's doesn't have any significance but it is smaller and the same thing applies to pay interest on Twitter.

01:06:08:27 - 01:06:47:10
Speaker 2
So they haven't managed to get traction. So I think, you know, what you will see is Facebook. Facebook is very good at adapting, you know, reinventing itself like the British monarchy. It reinventing itself and adding and some would say copying. But be that as it may be, the imitation is the sincerest form of flattery. So I think I think it's it's I would I would bet that Facebook will adapt.

01:06:47:10 - 01:07:20:18
Speaker 2
I mean, we we work for TikTok out of our Shanghai office and it's it's amazing and call it a sort of youngster's platform and I think is a little bit of an error because a lot of different silver haired, more mature people watch it. I mean, they watch it as a parent and they they use it as a parent to monitor or to watch what their kids are doing.

01:07:20:23 - 01:07:54:27
Speaker 2
On the first question, it's a really difficult one because, you know, the Chinese, if you and I had a Chinese platform and we had 1.4 billion potential customers, what would we do? We would be totally consumed. You know, we work for the Army, for example. And, you know, in the beginnings of the Army, I remember we had a strategy session in China or a strategy session, Yeah, it was in China.

01:07:55:16 - 01:08:19:27
Speaker 2
And for all our top sort of 100 people at WPP and we you know, we invited to join me in before it was one night when it was still private before we went public and know very Chinese and but quite rightly so, we discussed the strategy focused on China because the scale of the market is so huge, why bother?

01:08:19:27 - 01:08:48:13
Speaker 2
And China is not one country either. You know, it's it consists of several countries, many countries across all the provinces. So focus on that. Once you've exhausted yourself on that, then you can think about going outside. The other thing is comes back to this thing, which I really passionately believe is the one of the biggest, probably the most sensible way of putting it.

01:08:48:17 - 01:09:15:20
Speaker 2
But I think actually it's probably the biggest issue is the relationship between the US and China. Now, we you know, when when people say Google doesn't have a Chinese business, that's nonsense because it has an Android business. It's the outbound use by Chinese companies of Google is their second largest profit center, as I understand it. Same for Facebook.

01:09:15:20 - 01:09:51:04
Speaker 2
So their second largest country is effectively outbound Chinese. We're working for Amazon in China on outbound Chinese. So think of it that way. But I think inevitably, you know, the real answer to your question is we're going to see increasing, you know, like today, while we if if the US government doing away more. Will the Chinese government retaliate by bringing Apple?

01:09:51:04 - 01:10:17:15
Speaker 2
You're going to get this tit for tat if it's not diplomacy lacking in diplomacy. So I think the point that you're making, I mean, I think the Chinese, you know, if I was in China with it, with the big idea of make sure that you're talking about selectively, whatever happens to be, I would just focus on China and, you know, the devil take the hindmost state and then you see what's going to happen.

01:10:17:21 - 01:10:42:03
Speaker 2
But China is, you know, one of the biggest problems we're all going to face is self-sufficiency. Everybody will want to be, you know, all the supply chain stuff is really about self-sufficiency. We don't want to be exposed, whether it's pandemics or terrorists or wars or whatever happens to be to to interdependency. And it's it's terrible. It's terrible.

01:10:43:06 - 01:10:50:17
Speaker 1
I'm cover of this week's Economist of The Clash between and self-sufficiency. As that touches on exactly that.

01:10:50:25 - 01:11:18:12
Speaker 2
You know huge and each war and inevitably you know the the inequality is driven populism in you know the inequality between nations is going to be how Brazil and India, for example, come out with COVID is a real issue. And I hope they come out successfully. But, you know, Modi is stimulated to put in some reforms and a program 10% of GDP, which may which may well help in the case of India.

01:11:18:12 - 01:11:31:04
Speaker 2
But Brazil, you know, there's some challenges. So these are all big worries. But net net, you know, China's big enough and I think they'll they'll if I was them, I'd focus on that first and then you see what.

01:11:31:29 - 01:11:50:23
Speaker 1
Well, one of the closing comment was one from Alan Greenberg saying he remembered Magnus was so you weren't alone that. But I can't thank you enough for all of your sharing and your insights and we really, really appreciate it.

01:11:51:18 - 01:12:02:13
Speaker 2
Thanks for joining me. Expensive. Don't tell everybody to stay well and safe. Oh.