WPP CEO Sorrell: Google Will Overtake News Corp As Our Largest Media Investment This Year Or Next

Martin Sorrell, the CEO of WPP, today laid out a stark picture of how significant a role digital is playing for the advertising giant. Speaking at the FT Digital Media Conference in London today, he said that digital now accounts for 34% of WPP’s media investment, amounting to some $72 billion, rising “from zero to over one-third in about ten years, the age of Google,” he said.

Google, he said, is the second-largest recipient of that digital spend at the moment, at around $2 billion for the quarter, but that it will soon overtake the single biggest beneficiary at the moment, News Corp. Sorrell described Google as “a media owner masquerading as a tech company.”

Sorrell referred to these numbers as a preview of WPP’s quarterly results, which are out tomorrow.

He added that at the moment AOL and Yahoo are each getting around $400 million to $500 million in ad spend via WPP. Facebook, despite its size and current popularity, is only around $270 million. Twitter, he added, is “much smaller.”

With a lot of the interest in media spend focused on video content â€" TV viewing is still the most popular format for media consumption â€" you can see how significant YouTube is for Google’s wider strategy. You can also see some of the logic behind why there have been reports that Yahoo is eyeing up an acquisition or a stake in Dailymotion, a smaller but persistent rival to YouTube. Those talks have never been confirmed by either party, but we understand they have been ongoing for some time, and could value the company at around $300 million.

But video is just a part of the strategy. The reason for Google’s strength, Sorrell said, was because there are “five legs to its stall”: search, display, video (“we’re seeing increasing google penetration especially in high TV markets,” he noted), social google+ and mobile by way of Android and Admob. Android is the world’s most popular smartphone platform at the moment and by some estimates in some markets like like China is accounting for over two-thirds of all mobile sales.

Speaking on a panel with Jeff Bewkes, the CEO of Time Warner, and Thomas Rabe, the CEO of Bertlesmann, Sorrell described the other two media companies, more known for traditional media assets in publishing, television and film, as having “come to terms” with the new digital reality, making efforts to bring their products to new screens and following new consumption patterns. But he also questioned whether they are doing enough: “Their stocks are both at all-time highs,” he noted, “but is there a degree of complacency?”

Sorrell also noted that while digital spend continues to grow there remains a “disconnect” between consumer use and ad investments. In TV, about 43% of time is spent, which mirrors investment, and outdoor and radio “are about right.” But the two big discrepancies are in newspapers and magazines, where we’re still investing 20% but consumers spending 7-9%; and internet and mobile where “we’re spending 30% of our time but media only investing about 20%.”

As we have noted before, WPP’s aim is to have 40% of its business coming from digital in the next five years (that was an aim set last year), meaning that it is well on its way. Investments that WPP itself has made to boost its own ability to meet digital demand include buying digital agency AKQA and startup investments, such as leading a $10 million round in MySupermarket.com last year.

WPP plc, together with its subsidiaries, offers various communications services worldwide. It provides global, national, and specialist advertising services; above- and below-the-line media planning, buying, and specialist sponsorship and branded entertainment services; and specializes in brand, consumer, media, and marketplace insight, as well as works with clients to generate and apply insights. The company also offers corporate, consumer, financial, and brand-building services; consumer, corporate, and employee branding and design services, covering identity, packaging, literature, events, training, and architecture; a...

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Sir Martin Sorrell has been Group Chief Executive Officer of WPP Group PLC of Grey Global Group Inc. since its founding in 1986. Sorrell started his career as Marketing Associate of Glendinning Associates of Westport, Connecticut. In 1997, he was appointed as Ambassador of British Business by the Foreign & Commonwealth Office and subsequently appointed to the Office’s Panel 2000 aimed at rebranding Britain abroad. In 1999, he was appointed by the Secretary of State for Education and Employment...

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Time Warner, Inc. operates as a media and entertainment company in the United States and internationally. It operates in four segments: Cable, Filmed Entertainment, Networks, and Publishing. The Cable segment offers video, high-speed data, and voice services over its broadband cable systems to residential and commercial customers, as well as sells advertising time to various national, regional, and local businesses. Its services primarily comprise analog and digital video services; video on demand; high-definition television services; set-top boxes equipped...

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Bertelsmann AG is a transnational media corporation founded in 1835, based in Gütersloh, Germany.

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September 7, 1998

NASDAQ:GOOG

Google provides search and advertising services, which together aim to organize and monetize the world’s information. In addition to its dominant search engine, it offers a plethora of online tools and platforms including: Gmail, Maps, YouTube, and Google+, the company’s extension into the social space. Most of its Web-based products are free, funded by Google’s highly integrated online advertising platforms AdWords and AdSense. Google promotes the idea that advertising should be highly targeted and relevant to users thus providing...

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