WPP’s Sorrell Dispenses Wisdom About Internet Advertising — And Takes a Dig At Rupert Murdoch

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Every so often I read a news story that makes me wish I could hear the comments in context. Take the Reuters report about WPP CEO Martin Sorrell’s appearance Thursday at the UK IAB conference in London in which the uber ad exec describes News Corp.’s internet strategy as “almost willy-nilly” shopping being done in a panic. Luckily, IAB put up streaming video of the event so I could hear for myself. From the rather glib speech:

— WPP is not an ad conglomerate or an advertising agency; 54 percent of the company’s revenues come from outside classical advertising and 15 percent of that already is digitally based. They want to be two-thirds outside advertising.

— Given the way the story was written, I was astonished to hear Sorrell talk about how much he respects Rupert Murdoch — and a little surprised by his vague grasp of the details. Here’s what he had to say: “I think it’s sort of intriguing to speculate as to why, literally in the last two or three months, he’s decided to spend or try and spend, I think it’s about $5 billion, on internet properties of various sorts. … It’s a sort of second attempt by Murdoch and News Corp. to penetrate this. … Why is it that he’s sort of so preoccupied with this and willing to make investments almost, it appears, willy nilly? I think I’m going to use the word ‘panic’ and that’s probably overdoing it but maybe I’m not overdoing it, I think there’s a considerable degree of panic amongst media owners as to what is happening in the media markets. I think they see some circulation figures, some TV viewership figures, some advertising revenue figures that give them deep cause for concern. I don’t spend a lot of time with media owners … but over that last couple of years I can’t recall having seen a very happy media owner, certainly of the traditional kind. They’re all moaning. They’re all worrying about what’s going on. …”

Sorrell talked about how the New York Times was considered a great web success story but noted their earnings were down in the third quarter. They just figured it out actually. They’re going to charge people on the web, all of the sudden they’ve woken up to the fact that it’s no good reproducing these web sites, these points of access, unless you charge for them. … Everybody’s been consumed with sales or numbers of hits, market share rather than profitability.

He mentioned Craigslist — his version, “a bunch of people maybe on the left side of the political spectrum funded by a couple of job search companies to the tune of about $10 million dollars a year, fund a classifed web site … it’s operative here in the UK, really hasn’t taken off in the UK but my bet it will … What does it do? It really destroys traditional classified advertising businesses. In some markets in the US, 60-70 percent of classified advertising has suddenly disappeared.” Newspapers following the no-charge lead are cannabilizing and playing what Sorrell calls a “zero sum game.”

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frendz

The problem is not what people charge but how much they charge, the newspapre replicating physical paper costs on the net are asking for low sign up, make available on the net at low price and you have a winning formula.

The Internet has shown that people only read what they want to read and pay also for the whole paper!

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