WASHINGTON – National and local newspapers as well as magazines are two of the most challenged media in today’s environment, but digital media is here to stay, according to one of the most powerful men in advertising.
WPP Group PLC CEO Sir Martin Sorrell, who appeared on videotape answering questions from Postmaster General John E. Potter, confirmed digital media’s entrenchment during the general session on March 27 at the National Postal Forum.
“Paper-based media, such as newspapers and magazines, are probably the most affected today by digital media,” Mr. Sorrell said. “The second is probably radio. Maybe radio has become too fragmented.”
Mr. Sorrell said the third area most affected would probably be television, although he said there would be opportunities in cable and satellite.
“Finally,” Mr. Sorrell said, “the least affected media to date has been outdoor.”
New media, however, is booming, Mr. Sorrell said.
“We believe that consumers spend about 20 percent of their time online,” he said. “Interestingly, only about 6 to 7 percent of [marketing] budgets around the world are consumed by the Internet. Here in the U.K., we are up to 18 percent over 14 percent last year.”
Why? Mr. Sorrell said it’s because the U.K. is “a fairly sophisticated market.”
Mr. Sorrell said that the he expects the WPP direct and interactive advertising to go to about 20 percent of the market fairly quickly, and that it will increase to about 30 percent in short order as well.
“This is going to become a major medium, one that is parallel to what we see in television and magazines and radio,” he said. “Our advice to clients is to examine these media. Don’t automatically assume that you have to spend two-and-half million dollars on a 30-second spot on the Super Bowl.”
Mr. Potter said that while 20 percent of the U.K.’s advertising dollars will move to direct, in the United States, 20 percent of advertising dollars are spent on mail.
“The mailing industry has a much greater penetration than is experienced in the rest of the word, and that is a function of the sophistication of the mailing industry…as well as the modernization of the U.S. Postal Service,” he said.
Mr. Sorrell was not able to attend the forum in person because he had a court hearing in London yesterday as part of a lawsuit he is involved in. Mr. Sorrell and Daniela Weber, an executive at WPP’s Italian unit, are suing former WPP executives Marco Benatti and Marco Tinelli in London over the dissemination of an e-mailed picture last year.
In the videotaped interview, Mr. Potter asked Mr. Sorrell if there are any limits to what mailers can expect from the Internet in the near future.
“[The Internet] is a very powerful media, and it’s a democratizing medium…I don’t know how much of a limit there will be,” Mr. Sorrell said. “It’s going to be very difficult to figure out what the new technologies will be.”
Mr. Potter also touched on the do-not mail legislation issue, and asked Mr. Sorrell to comment on the best way advertisers can communicate to an oversaturated consumer and essentially how to break through the clutter in any medium.
“I think there is a danger that the consumer gets exhausted,” he said. “But the difference is that now, the consumer is in control…We can see over-saturation of media, but we what we are increasingly seeing is the ability for consumers to select what they want. They are not couch potatoes anymore…They are making choices about what they consume and how they consume it. They are much more active and much more in control.”
Speaking about the do-not-mail bill, Mr. Potter said that the industry has to rethink its business model.
“The business model for the past 35 years has been all about driving volume,” he said. “That’s a great model and has worked and served us well. But going forward, is that the model that will serve us well in an Internet world? As we address the issue going forward about what the relevance of mail will be in an Internet age, we have to debate the issue of volume versus return when it comes to advertising.”
