1. Digital and the changing consumer
Pay-walls are essential because we think giving away content for free, particularly if consumers value that content, makes no sense. Consumers have to pay for content they value.
Clients are interested in targeted and focused communications, and marketing messages surrounding those that are going to be more effective. So if targeting is more effective, they will buy into it. If it's not, they won't.
As you know, 30% of WPP's business is already digital. There's a definition issue in where does digital begin and where does it end, in that it now infuses everything.
There are three ways in which WPP is becoming more digitally focused. One is taking traditional businesses and getting them to move as quickly as possible into the digital spaces. For example, a JWT, an Ogilvy, a Y&R or a Grey in classical advertising.
The second is taking our big digital networks that are already strong digital businesses. In fact, we have three of the seven digital leaders, according to Forrester: Wunderman, which has revenues of $950m; OgilvyOne with $850m, and VML with about $120m.
We also have our other networks – Possible Worldwide with about $100m, G2 with $300m – that are making sure they develop their digital business even faster.
And the third is taking companies such as WPP Digital and Possible Worldwide and building them into strong units, making investments in areas such as Omniture, Buddy Media and Wild Tangent, and putting together new offers such as Xaxis. This has been compared to Publicis Groupe’s VivaKi, but that's not so because VivaKi is just an amalgamation of companies.
Xaxis is a platform – an online trading platform that competes with DoubleClick and others, in terms of developing inventory, rich inventory and premium inventory, and has a database of 500 million consumers.
The answer is to move your established business quicker, take your digital businesses and make them stronger, and then invest wisely – or hopefully wisely – in new tools.
2. Brand management
Brand management is more and more complex. That’s what our lives are about. The more complex it becomes, the better it is from our point of view and the more added value we can make (ask Kantar, which is a $5bn analytics business).
As it gets more fragmented and complex, with consumers and customers getting all sorts of impressions from different sources, it has become much more important than it ever has been.
You see companies increasingly doing corporate branding as well as product and service branding, and it's becoming more and more difficult to deal with. That's a big advantage for us as that's the business we're in.
3. Hiring, retaining and developing talent
Our industry is notorious for not developing talent but nicking it. When I look back at the WPP Fellowship scheme that we started 11- to 12-years-ago, my biggest fear was people would copy it – they haven't. And it tells you what people are about.
When we were in Austin, Texas with John Wren [Omnicom], myself and one other, John and I bemoaned the stealing of talent and that we only pay lip service to it.
The other person on the panel said he didn't pay lip service. The irony is that his HR director is a professional nicker. All he does is go around the world writing emails to people, trying to steal talent. The person could have been Michael Roth [Interpublic] or Maurice Lévy [Publicis]… and Maurice wasn't there.
We don't recruit people very well. We don't assess them very well. We don't give them feedback very well. We're trying very hard – harder than we did a year ago, five-years ago, 10-years ago – but there is such a long way to go.
Our focus is new markets, the Brics and next 11, which now make up about 30% of our business. The world's moving not just East but to the South. The areas that are growing faster are Asia, Latin America, Africa and the Middle East (even with problems) and Central and Eastern Europe.
The only places that are disappointing at the moment are Japan, for understandable reasons, and that has been the case for a secular point of view for about 20 years, and then the Middle East, because they are under pressure for the obvious reasons also. The world is moving at different speeds.
There are six things that people are worried about: first, Euro contagion; second, that the administration in the US is not focused on the deficit; third, the input prices, commodity prices; fourth, Japan and supply chain issues; fifth, the Middle East; sixth, the withdrawal of QE2 credit and the stimulus to the economy, post-Lehman.
One of the reasons the markets are so nervous is that they don't know what impact that will have.
We think 2011 will be a reasonably good year, while 2012 will be better for the obvious reasons: the likely $4bn of media spending around the election post the US Supreme Court decision, the European Football Championships and, last but not least, the Olympics.
In the US, the rubber hits the road in 2013, when the newly elected president (probably the re-elected president – I do think Obama will get re-elected) has to deal with the deficit.
5. Social media and social responsibility
We think there are twin peaks – people are, in my view, spending more time at home because of higher levels of unemployment and eating at home more. We certainly have seen a rebound in TV, although less of a rebound this year than last year – there was probably a bit of a dead cat bounce last year.
But people are investing in brands, particularly in the West, where there's tremendous pressure and uncertainty and people are frightened of making mistakes. In such times, investing in brands is better than investing in new capacity.
There are twin peaks – traditional TV, particularly with high-def and 3D – and then there are the other things that people do when they are watching TV, which is use social media, smartphones, PCs, Twitter feeds and Facebook pages.
Having said that, the risk of social media is you invade people's social space and they object to it. So having commercial messages in the middle of social relationships or the development of social relationships is somewhat dangerous and we know even the biggest experts make mistakes in that area and underestimate the impact of commercial messages when people are trying to exchange things socially. Its very powerful but you have to be cautious.
We have invested in Buddy Media – it's the prime platform for Facebook. Eight of the top 10 advertisers use it. It makes the relationship with Facebook a very productive one. Having said that, you've got to look at it very cautiously.
The PR business has been impacted very heavily, positively, by social networks, both in the development of data and the interpretation and application of data and technology to the business.
I'm sure Google+ will add grist to the mill, but Facebook poses a great challenge to Google, along with Apple and the regulators, so we'll have to see how it takes up. From my client point of view, the more competition the better.
Interview by Arif Durrani, group news editor, Brand Republic
WPP Group includes: 10AM Communications, 141 Premiere Sports & Entertainment, 20:20 Brand Action, 24/7 Real Media, Agenda, all access ltd, All Global, All Global Viewing, Alliance, Always Marketing, APP (Agência Portuguesa de Produção), Aqua Online, argonauten, G2, avh live communications, AxiCom, B to D Group, B|W|R, Banner, Bates 141, Dawson, DCSNET, deepblue networks, Deliver, Dentsu, Y&R, Designkitchen, Designworks, Dewey Square Group, LLC, Dialogue141, Ogilvy Group, Diebitz, Stöppler, Braun & Kuhlmann (DSB&K), Digit, Digitaria, Direct Impact, Dovetail, Johannes Leonardo, JumpTap, JWT, K&L Advertising, Kantar, MediaCom, Mindshare, MEC, Maxus, Quinn Gillespie & Associates, Red Cell, Red Dot Square Solutions, Reddion, RedWorks, RessourcenReich, Robinson Lerer & Montgomery, RPCA, RTCRM, Santo, SAY Media, Scangroup, Scholz & Friends, Wunderman, Xaxis, Y&R, Young & Rubicam Brands, ZAAZ.