business:life: How's business?
MS: Clients tend to operate on
a calendar-year basis and budgets seem to
be pretty much locked in for 2011. In fact, we're heading for a record year. But fears of euro contagion, the lack of attention to the US deficit, the supply chain problems in Japan, the political upheavals in the Middle East, the rise
in commodity prices and, last but not least,
the fiscal and monetary stimulus post-Lehman – these six things obviously must have an impact at some point in time.
Having said all that I feel reasonably OK
about 2012. We have a number of events next year, such as the summer Olympic Games in London – which promises to be extraordinarily good – and the impact on media of the political spending in connection with the US presidential election, which should be around $4bn. My biggest concern is what happens in 2013.
I think President Obama probably has a very good chance of being re-elected and, if he is, it will probably be with the Republicans controlling the House and the Senate, which means we'll probably have gridlock again. That's what I really worry about: the lack of attention to the US deficit.
bl: As news continues to migrate from newsprint to the web, when do you think the
last newspaper will be printed in Britain?
MS: I wish I knew. I think it will be a very long time before they disappear completely, but
that is the area of our business, particularly in the mature markets such as Britain, which is under the most pressure. It will affect the BRICs and Next 11 and the fast growth markets more slowly but the penetration of devices such as the mobile – 950 million in China already, 850 million in India – means that this is going to have an impact on the way that people consume media even in those markets.
bl: Why is it so difficult to make money out of news websites – neither the paywall nor the ad revenue model appears to work – and what does this mean for media's role as a check and balance in modern developed democracies?
MS: First of all, I think three things have to happen. We have to have consumers paying
for content, there has to be more rationalisation as there are too many media owners and companies and, if we think professional journalism is worth saving, there probably has
to be some form of [government] subsidy. I
was very interested by the behaviour of the Australian government, which put back A$200m into free-to-air television because of the pressure they had been under from digital. Likewise, the FCC [Federal Communications Commission] came out with a report about a year or so ago that suggested that it might make sense to
put together a fund to invest in traditional newspapers to try and preserve them. We can't rely on wealthy individuals or institutions to bail us out by buying trophy properties.
bl: The science of media buying has changed out of all recognition in recent years, how has that affected WPP as an organisation?
MS: Our media buying and planning business continues to grow. We manage a portfolio of about $70bn and obviously areas such as search, display advertising, social networking, and video content on mobile are generally becoming more and more important. It's actually making [the media] more fragmented, more targeted and more sophisticated and therefore our role is becoming more important. To operate in this arena, we need to build server farms. We also have to hire PhDs, as Google, Microsoft and Twitter do, but essentially what it means is two things: the application of technology and data analytics are both becoming more important
for our business. It's quite different to when we started out on this journey 26 years ago, when the BRICs and Next 11 were nothing and are now a third of our business; when digital was nothing
and is now a third of our business.
bl: Are virtually profit-free companies such
as Skype, Facebook and Twitter worth the multibillion valuations put on them?
MS: Who am I to say? Somebody asked me
a year or so ago: "Do you think Facebook was worth $15bn?" and I said, no. Now they're talking about $100bn, so I'm not the person to ask. I worry about excessive valuations, particularly in the United States, in the internet and new media area. It is a fact of life that venture capital companies, even private equity companies, don't look at the traditional means of valuation when evaluating these new media companies.
bl: You have three sons in investment banking. If you had a child today, which sector would
you advise him or her to go into as an adult?
MS: I don't know whether I would focus on sectors as much as on geographies. If you look at the first seven months of our business this
year, we grew overall at about 6 per cent,
but we grew in the BRICs by 15 per cent and
in the Next 11 by 14 per cent. It seems to me
that the areas to focus on are the fast-growing geographies so, once you've got your education, perhaps done your postgraduate in a foreign country, get one or two languages under your belt. Not like me with my restaurant French. Mandarin plus Portuguese wouldn't
be a bad way to start, and possibly Russian. Probably geographically, I would search out for experience in the fast-growth markets – digital and new media areas are very seductive.
bl: You're 66 years old: do you have any thoughts of retirement?
MS: I haven't, but at some point in time somebody will say, "You've screwed up enough, now go away." I don't control the company.
We run it in the way most public companies
are run, with a chairman and a board of directors, and whoever succeeds me will obviously run it in a different way. My biggest strength – and probably my biggest weakness – is the fact that I started the business 26 years ago and, as a founder, you have a different mentality. The famous quote I always go back
to is Bill Shankly's when he was manger of Liverpool. He said: "Football's not a matter
of life and death, it's more important than that." WPP is not a matter of life and death, it's more important than that. And I'm not dead yet.
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