Tech platforms are getting closer to ad clients, which threatens to edge out larger advertising agencies, according to Sir Martin Sorrell.
Sorrell, the founder of S4 Capital, said there were a number of factors contributing to this trend, including the rise of Artificial Intelligence (AI).
“Platforms will get closer with their clients,” Sorrell, founder of S4 Capital, told Campaign UK in a conversation about how AI will affect advertising agencies.
“That creates a lot of nervousness among the larger agencies because they like to keep in control of their relationships.”
MediaMonks, owned by S4 Capital, and Google are touring Europe delivering AI workshops for clients to address the concerns of brands and agencies as the technology disrupts the industry.
Wesley ter Haar, co-founder of MediaMonks, is joining Sorrell on a European AI tour, which ran one of its first workshops this week.
Hosted at Google’s London office, the workshop included a “fireside chat” with Sorrell and Matt Brittin, Google’s EMEA president. It was open to advertisers but closed to journalists.
“Large companies are somewhat reluctant to change, particularly if they’re doing well,” Sorrell told Campaign UK when asked how agencies are coping with AI innovation.
Under pressure
“If they’re under pressure, if they’re being disintermediated, then people are more prone to change.”
The former WPP chief quipped that agencies think advertising has become more complicated when really it has got simpler, as it is being farmed through a few dominating platforms.
In the western world these are chiefly Alphabet, Meta and Amazon, followed by Apple and Microsoft.
Sorrell explained how small and medium-sized companies (SMEs) “find it pretty daunting” and that the refrain he hears from platforms is that “it’s difficult to get small and medium-sized businesses engaged”.
He estimated that 60-70 per cent of revenue from the western big tech platforms comes from small and medium-sized businesses, rather than the likes of Unilever, Procter & Gamble or General Motors.
For that reason, Sorrell stated that S4 Capital and MediaMonks would be focusing on SMEs.
A version of this story first appeared on Campaign UK
