World’s Second Biggest Advertiser Prepares for Their Internet Future

Martin Sorrell, CEO of WPP, has started preparing his ship for a change in course, and joining the fleets setting sail for exploration online. This is in response to WPP’s figures, for the last quarter, in which they experienced growth of only a measly 1% in the UK. Significant news when you consider that in 2005 the figure was 14% and 22% in the US. Traditional advertising appears to be drying up, and now even the industry’s High Admirals are realising that the riches and rewards are to be found in new lands of opportunity.

WPP is recognised as being the second largest advertising and marketing group on the planet. With around 84,000 staff and 1400 offices around the globe, WPP’s figures are a key indicator of the advertising industry’s health.

TV advertising revenue might be falling, but Sorrell isn’t about to scuttle the entire fleet from the medium just yet. WPP are due to produce their own TV dramas, and advertise by product placement and sponsorship.

WPP have also launched a joint venture with Universal Music, the world’s biggest music company, to link brands with bands. The aim is to investigate new ways of utilising artists and breakthrough acts to promote products, other than merely providing the background music.

With cynical consumers becoming immune to marketing messages, WPP are learning that they have to come up with ever more creative ways of penetrating their audiences.

Sorrell might be adopting new tactics with the traditional media, but he is also not so stubborn as to ignore the shift in eyeballs focusing online.

Sorrell has blamed their falling growth on the rise of internet advertising, which occupies a larger percentage of ad revenue in the UK than anywhere else in the world. In the first half of 2006, online advertising spend was £917 million; an increase of 40.3% on the previous year!

But from his comments in 2005, you wouldn’t expect him to suddenly start ploughing his entire war chest into fighting over uncharted, or properly explored, opportunities online:

“Why is it that he is so preoccupied with this and willing, it appears, to make investments almost willy-nilly? I think I can use the word panic – that is probably overdoing it but maybe I am not.“- Sorrell on Murdoch’s purchase of MySpace, Oct 05.

Murdoch bought MySpace to chase the advertising revenue escaping from his creaking newspaper fleet. But Sorrell has already sought to distance WPP from being an advertising company. They are instead a business focusing on “insight, information and consultancy, public relations and public affairs, branding and identity.” Perhaps this is an indication that advertising is becoming a weak term; now marketers have to think of influencing people’s perceptions through more subtle means.

As Sorrell mentioned recently, “growth of the internet was driving spending in public relations, the fastest growing area of WPP’s business during the last quarter, as companies sought to influence social networking websites, blogs and other online forums.”

With this in mind, WPP have, over the last few months, been making strategic investments in emerging online businesses. Instead of full blown acquisitions, they have been making tentative steps into understanding the internet and its new branding opportunities. WPP’s investments will be able to provide them with an insight into what’s going on and to assist them develop the online relationships needed to promote their clients:

  • Visible Technologies – Monitors search results and blogs for insight into how brands are being perceived online. WPP bought a 25% stake.
  • Live World – Promote clients in online communities and influence conversations by developing blogs and message boards. Received $2 million funding from WPP.
  • Wild Tangent – Provider of downloadable games featuring in game advertising and branding. They also develop complete games for advertisers. WPP has bought a 3.4% stake.
  • Spot Runner – provides online interface for low cost services for TV advertising. WPP have invested for 10% of the company.

Sorrell is following the trend of redirecting funding into formulating an online strategy of PR, branding and relationship development. Last year he had already admitted that the pace of the digital revolution was “faster and bigger than we had anticipated.”

When the world’s second biggest advertiser sees their growth in a key market fall from 22% to 1% in the space of a year then you know there will have to be a significant change of course in marketing’s direction. We might not be witnessing ‘advertising’ being made to walk the plank just yet. But I expect to see far more ships following WPP’s example and hoisting their sails, for invading and plundering the internet, under the banner of branding, relationships and PR.

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