Martin Sorrell, CEO of WPP Group plc, the second-largest ad-agency holding company in the world, gave TV networks something to chew on last week in comments to investors at a Goldman Sachs Group Inc. conference in New York.
In essence, he said, advertisers have to find an alternative to network advertising because it's simply becoming too costly.
At WPP, he added, the "strategic objective" is to steer clients away from traditional advertising and into more nontraditional marketing services, including direct marketing, entertainment events and sponsored programming.
Currently, the split between traditional and nontraditional at his shop is roughly 50-50. Over time, he said, that will shift to about two-thirds/one-third in favor of nontraditional marketing.
He likened the situation to the auto industry. If the price of steel increased continuously at a rate faster than inflation (as has network pricing), then automakers would be forced to "use less steel and find alternatives." It is no different for advertisers, he added.
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