Natalie Novak 

Hi everyone, welcome back to the storyteller stage at sea space My name is Natalie Novak and I'm an agent at UTA, and I am one of your MCs for today's lineup. We have four fantastic sessions today and full slates the next few days. So, without further ado, I'd like to welcome to the stage. Marta Martinez, Director of Google marketing platforms. And then our panelists Wesley ter Haar founder of MediaMonks, Pete Kim, CEO of MightyHive, Louise Martens, Global Head of Embedded Production at MediaMonks and Sir Martin Sorrell, Executive Chairman S4 Capital. Welcome panelists.

 
Sir Martin Sorrell 

Great, great film shame about the panel.

 
Marta Martinez 

That's right.

 
Sir Martin Sorrell 

 Okay, we'll start there.

 
Marta Martinez 

All right, welcome. Thank you for joining us. And Sir Martin, I wanted to start with you. 2020 Brexit, US elections. Yeah. trade relations with China, Olympic Olympics. You know, trade relationships with China influx. How do you think that these microtrends are going to affect marketers in 2020? Help us think through the big trends for this year,

 
Sir Martin Sorrell 

which will be the answer, I guess, is Thank you. So firstly, thank you for doing this. Marta. On behalf of my colleagues myself, I guess the big of the ones that you mentioned, I wouldn't sort of diminish the importance of Brexit but I think the or diminish the importance of what's happened in the last Last week or so, in Iraq and Iran, but what I, what I would call out as the the most significant issue is the relationship between the two, between the US, which is a $20 trillion economy out of about 70 trillions of the 5 trillion and the and China which is around 12 trillion, so roughly almost half of the world. world's GDP is in these two and it's, it's the these two are at loggerheads. Interestingly, Byron Wayne was on CNBC this morning, saying that he didn't think phase two, the trade talks would be implemented, and I just think the Chinese and the Americans sort of implacably opposed to one another, certainly under this administration and unlikely may change under a Biden administration is that happened, but under the other candidates, maybe under a Bloomberg administration it will be slightly different. But on the assumption, you know that the that the President retains his position and wins again, unlikely to change for another four or five years. And I think that's the biggest issue. That is the the unwillingness of America to accept the rise of China. I think that's the fundamental issue that maybe not so much on the left of the political spectrum in the US, but certainly on the right of the political spectrum. This this unwillingness to accept that China has become a major force and this has big implications in technology because China in terms of its if you said to me, what's the thing that you're sort of most excited about? One of the things would be from a technological point of view and perhaps you see it a bit here at CES, but maybe not enough is the rise of China from the technology of it with the with the exception semiconductor technology where they're catching up fast AI, for example, bitcoins and and this this whole area of new technology,

 
Sir Martin Sorrell 

Bitcoin and that all that area is becoming so significant China and they are taking the lead. So that's the central issue. The other things are also equally important. I was in Latin America recently the the issues in Latin America, whether you're talking about Mexico, whether you're talking about Brazil, whether you're talking about Argentina, whether you're talking about Colombia, whether you're talking about Chile, whatever. These are very big issues in that context, Middle East, what's happening in Hong Kong, which is a sort of a subset of the the jeetu issue. But I think the fundamental the fundamental problem for people running businesses, when China is your largest, your second largest or your third largest market is what is going to happen between those two. Those two powers.

 
Marta Martinez 

Yeah. So if you think about it from the marketers perspective and the marketing services perspective, I think this year, we've seen a tremendous we're starting to see a tremendous amount of change in the marketing services landscape. You have agencies merging or holding companies, merging agencies, you have consultancies, buying creative agencies, you have new models like as for coming into the market, how does that affect the ability of marketers to continue to drive growth for their businesses?

 
Pete Kim 

Well, I think that the right way to look at what's happening in advertising services right now is to use the D word. This is a time of full on disruption. And the norms and the processes and the old way of doing things are simply out the window, because it's time for a change and disruption is opportunity. And disruption is also a lot of work. And so you can see all of these things playing out before your very eyes. The giants of yesterday are struggling. And they are being replaced by new entrants, like S4, and others who are coming forth with the advantage of agility, and not having to really be loyal to old business models that nonetheless, are still expected to generate reliable and predictable profits. And so from a marketers perspective, it becomes confusing, right? Because it's not clear during times of disruption, exactly what the right answer is. And so you have to have your head on a swivel and really start to look at all the different options with a degree of precision and a degree of care. That really hasn't been necessary until just the last few years.

 
Marta Martinez 

Do you think that marketers in need to- like that? What is your recommendation for marketers given that you have all of these different new models out there, given that they do have an enhanced responsibility, especially when it comes to managing, effectively their data assets?

 
Pete Kim 

I think that there's no magic there beyond the fact that you need to experiment and take a look at the various models that are out there coming in with a fundamental assumption that there is change that's going to be necessary. Some people may experience experiment with things like in housing, other people may experiment with other types of data driven strategies that haven't been used in the past. Though mighty hive is known very much for our work in in housing, we're not zealots about this, right. Our belief is that change is necessary for every market here in the world simply because every company's Cust consumers are changing faster than any other points in You know, recent memory. And that just means that they're going to have to experiment with all these things and see what works. And there's no real, you know, substitute for having a hypothesis, testing it out and analyzing the results.

 
Marta Martinez 

Yeah. So I have to ask you, it's only been one year or a little bit over one year for S4 Capital. Yeah. And in that one year, you started by bringing MediaMonks and MightyHigh

 
Sir Martin Sorrell 

MediaMonks was sort of July of July of last year and MightyHigh was Christmas Eve, of last year.

 
Marta Martinez 

Christmas Eve. And then in acquisitions more since then. Yeah. So how do you look at their prospects like one year in that some days feels like 10 years and some days feels like a month?

 
Sir Martin Sorrell 

Well, I think it's remarkable. I mean, I'm obviously subjective and everybody is subjective about it, but it is remarkable. We've got to unicorn status defined as a billion dollars, not a billion pounds, quite But in terms of market value within a year and I are just 15 months, I'm not aware of any company in our industry that has done that so quickly so and you focus quite rightly martyr on the deals or what we call mergers because we're, we're bringing people together who share the same vision. I mean, we're purely digital. We're focused on what we call this holy trinity of first party data, driving the development of content and programmatic. So we have that that triangle or pyramid, our mantra is faster, better, cheaper lania and one Zambrano of firewood which are joined our content pillar, recently largest digital agency, Silicon Valley, well known to you and your your colleagues. They call it speed, quality and value that's much more elegant and less, less superficial, I think. And then finally, we have a unitary structure. So we're trying to get every Body, unlike the whole, that traditional holding companies are, which I wrestled with one for 33 years to think about things as one firm, which to be fair to the six holding companies, they're moving towards that, but they have analog baggage that it is impossible to get rid of the only way that you can get rid of it in a funny way is what web did with cancer is, you know, you bring in a private equity partner to blow it up. And you've already seen the decapitation of the CEO of Canada, almost before the ink was dried on the contract. So it needs violent change to change these disrupted analog businesses, not just in our industry, and everything else but a year in a we're very pleased with the progress. I think the focus has to be that our organic growth rate is 45% or thereabouts. And that's the key. I mean, in a business that as you well know. The attitude of people inside of business, in all functions in all silos is very different. If your top line is growing at 20 30 40 50% than it if you're scrambling to get 100 basis points 1% or 2% growth. So the mentality is totally different. Our strategy is not big presentation, approach its land and expand what I think both Pete and his colleagues and where's and his colleagues, at media monks and mighty have are very good in our content. And our programmatic pillar is given the opportunity like we were talking with a client of breakfast this morning, we weren't talking about participating in a 10 month pitch, which I think is counter counterproductive both to the client and to the ages is a waste of resources. And if you're the incumbent, you have to defend the business. And you have to to win the business as well as you almost have to have two teams. So I think that the whole process have become too cumbersome. And going back to what Pete said this marginal propensity, I think, for clients to experiment is at a level that I've never seen before. So the critical, the critical opportunity for us is conversion at scale. You know, we probably are running at about $400 million of revenue now, and about 100 million of EBIT, if you pro forma everything that we've done. What we have to do is take is to develop whoppers, as we call them, which is significant client relationships. And we have to demonstrate that our new era New Age model works at scale. we've demonstrated that it works at this scale. What we have to demonstrate is it works at significant scale and there is a desire you know, it takes I remember the day that we announced firewood. The merger with forward. Mark Pritchard a Proctor really gave us the best ad that I can ever remember. He talked about first party data, he talked about 1.3 billion consumers that Proctor had profiles on. He talked about in housing or embedding or co locating on the content side. And on the media on the programmatic side. So here's the world's largest advertiser, or one of the two largest advertisers of Samsung has eclipsed Procter is advertiser talking about our model in a way that gave it I think, tremendous credence. So if you ask me a question, not one year and what do I want to see five years in that total acceptance by the industry, by clients, by the agencies, within the industry, by analysts, by observers, by the press whatever of this model as the model of the future

 
Marta Martinez 

Alight, not small feat.

 
Marta Martinez 

So from the marketer perspective, one of the new trends they're seeing is these emergence of the DTC brands. So obviously DTC brands almost like your model and marketing services is newer, faster in has the ability gives the ability of marketers to act a lot faster than they have traditionally been able to do. Whereas with Pete, like, how do you think about these? Let's call it threat for the more traditional brands that a that have been the core of our industry until now? Are they here to stay? Is this something that is just a trend in how do you help them think through these new trends?

 
Wesley ter Haar 

I definitely here to stay as a concept direct to consumer, why wouldn't it be especially when you start thinking about channels? I think we see some of our more traditional legacy clients struggle with this either being attacked from all sides because they get suddenly 10, 20, 30 different competitors, just taking small bites out of the big pie. And then of course, they buy them mostly, I don't think that was going to change. I do think it's sort of there's a trend component to it, because I do think that modern consumer doesn't have the same level of brand loyalty that maybe we've been used to. So they might try a lot of these up and coming DTC brands, but they're not necessarily loyal for life to these types of brands. So while we've seen a few come up, sometimes they plateau and go down as well, but conceptually a direct to consumer relationship and building what we call a personal path of that relationship where you're not just looking at the data and retargeting you're trying to create the next phase of that relationship through a better understanding of where somebody is in their in their journey. I think that's that's a given as a concept.

 
Pete Kim 

And as I take a look at this, I absolutely agree with West that DTC is here to stay. It is yet another industry that is being disrupted. And at this point in time, if you're doing an inventory, you might, it might be easier to count the things that are not being disrupted than the things that are. From the perspective, when we're talking to marketers about DTC and whether or not you know, a big firm should start to embrace or experiment with these things. The answer is, of course, right. And in the general philosophy of trying things out for yourself and trying to see what happens and experiment with these types of things. That being said, I do believe that DTC is more appropriate for certain product categories than others. Yeah. And the question that you really have to ask yourself is do I want a personal relationship with this product? And sometimes the answer is yes. Sometimes the answer is no. But I think that when the answer is yes, it really puts a an onus on all the competitors in that market who are trying to provide products to provide that level of personalization to provide that level of speed and agility. Let's see. And that does mean that you have to rethink your entire service delivery model your entire data acquisition and analysis model. And all these things have to work at 10 to 100 times the speed that they have in the past. And that's not easy.

 
Marta Martinez 

So if you have to change the entire consumer experience with which is what you are referring to, because now you have access to the consumer directly, Louise, then Wes, what does that mean to the creative process? How does the creative process have to change to adapt to these direct relationship with a consumer that we now have more access to them before?

 
Louise Martens 

Right, I think it's actually very practical concern. Speed says the speed the the sheer volume has grown so much. You know, we used to live in an era where you had four big moments in a year and now marketeers have to turn around thousands and thousands of assets across you know, languages, formats channels. It's a so much. So what you see is that it's truly a sort of back end process, what type of framework can you put in place that can successfully carry that? Right? I think marketeers have to do more with less because the, you know, the exponential demand for content is not in proportion with the budgets, right. So you have to be smarter, faster. And that pressure on the organization has sparked models like in housing colocation, lots of different models. And I think the brands that are winning at this, have dared to look at their ecosystem of partners and have get, you know, you can't achieve this with a scattered vendor landscape. You really need an ongoing machine that can constantly interpret, measure, test and feed insights back into the creative process. Right. And that is a framework so We have been doing this for many years as a production company, right? So we're naturally being asked to help out, set that up, and also supplement augment skills that a brand might not have in house or that wouldn't make sense to have in house. So those relationships are very new, much more agile. Contracts are more flexible.

 
Louise Martens 

And I think the brands have, you know, look, don't look at production companies anymore as a purely transactional, very executional partner. It's much more deliberate, it's more strategic, it's digital transformation. It's changed management. And that's difficult, right? You can't do that on a project basis. You need to look at it long term. Building studios takes a year, a year and a half to get into a mature place. Right. So I think what's behind the curtain is what makes it successful. We have to have a system in place that can turn that content, all those deliverables around interpret the data in a smart way. Because there's a lot of it, you need to be able to make sense. Yes.

 
Sir Martin Sorrell 

So just just what Yeah, so I think just picking on what Louise said, there, this is where Brexit is important.

 
Sir Martin Sorrell 

In a perverse way, or slightly strange way, I think marketers have taken back control, rather like the British voter wanted to take back control from Brussels. Marketers like Mark Pritchard wanted to take back control. And by that there are two things that happen. One was after the catastrophe of 2009, the financial crisis of 2009, which was the deep trough, there was this this switch to zero based budgeting, cost control, and a sort of whittling out of all the internal Sources marketing resources. So that was one thing. And in a world that was growing slowly, more slowly than before 2008 before the financial crisis and less inflation in that world, there was a pressure on costs. And you know, you had low growth, low inflation, very little pricing power, the rise of finance and procurement. That was one thing. The second thing is in 2016, whether it was because of GDPR, or privacy, brand safety, interference in the elections, the platforms signaled yourselves included. The platform is signal that they weren't going to share the data to the extent that our clients thought they would when the web came along, web came along thought this is going to change the whole structure will be able as clients or manufacturers to have direct relationships with the consumers. That didn't happen. So what then became a paramount importance is to exercise more control over the relationship. So a Nestle with Starbucks, the classic case The fight with Amazon for a brand that Amazon really wanted, as opposed to maybe others that they they didn't want and their knowledge of the brands, with Google, with Facebook with Tencent, Alibaba, those five maybe now with the rise of bytedance and Tik Tok maybe that's really the first breakthrough that I've seen recently of another nother platform, you know, generating about what 7 billion in dwarfs and doing significance in comparison to Google and Facebook and Amazon but still now starting to get some momentum. Those two features are really many marketers have had to take back control. So the sort of things that Louise said there, those features become really important.

 
Marta Martinez 

Yeah. And it's true with access to consumer data, also comes a huge responsibility. So Pete, how do you think about data as the currency I'm and the opportunity for marketers Actually like Mark Pritchard have profiles of many of the customers that they interact in, in a regular basis with.

 
Pete Kim 

So I think its first, the point that I want to make is to understand that data exists for a reason. And it's not an end unto itself. Over the last decade, we've seen a fundamental change in consumer behavior. And for the first time in history, consumers now expect everything to be personalized, whether it's their media streams, because they can watch anything they want and listen to anything they want, or digital experiences that are always tailored to them. They now it's personalization is table stakes. And if you're going to do personalization, right, how can you do this unless you know who you're personalizing to and that is the role of data. It is extremely necessary and imperative that this happens and it is also extraordinarily difficult to do this. The question was, how are people doing today? And I would say that the reactions and right now are mixed. It's a very hard thing to do to take all these disparate data sets, some of which may contain actual value or signal, as you might call it, and some that might not. And to go through all those experiments and to do all the work of finding the people that understand data fundamentally and can even like, you know, really do things with it, as opposed to sound like they know what they're talking about, all the way to, you know, just the, the chores of cleaning data up, you know, like 90% of successful data analysis often is in the cleaning of the data and just assembling a data set that's worth analyzing. And that's hard sometimes. And that's not only just collecting the data, but then actually like wrestling with IT and you know, ETL and all these like acronyms in order to get it to the right place. And so what I would say is that it's incredibly important. People are still trying to figure it out. there are just as many failures as there are successes these days and that is totally normal. Yeah, because progress doesn't knots occur in the face of, you know, sort of unambiguous successes, you have to try things and cross things off the list. And that's what failure means. But as you kind of progress down this line, what we'll see is that more and more the people who do find those nuggets and find the ways to succeed are going to show outsize financial performance. And that is going to force the rest of the market to come along with. But today, we're only halfway there.

 
Marta Martinez 

I hear you. I hear you say get comfortable being uncomfortable and really try on learn it because we have to fail a lot of times until we get it right. A probably not all of the different work streams that we have to engage with are super sexy, but they got again.

 
Sir Martin Sorrell 

But don't underestimate the difficulty of it. Because, again, you know, the, you know, if you're CEO of a listed company, which you don't control, unlike some structures that we know. And you're promising the street certain performance Yeah. There's an inbuilt middle management is not going to change the model, because they're being pushed to perform and to deliver the promises. And if you're starting to shift, you know, away from traditional to digital and experimentation, it's very difficult. So I think it's easy to criticize. I mean, the six holding companies are all in their various ways moving in the same direction to one firm. They're moving at different speeds, maybe slightly different routes, but essentially going in the same direction. The question is about, you know, how many eggs you willing to break to make the omelet? And I think you know, you coming back to your original question 2020 will be the year when the holding companies when the rubber really hits the road because these pressures that we talked about, are going to intensify this year because growth is going to be even more difficult to come by A worldwide GDP, three or 4%, cluding inflation at best. And there are all the problems that we referred to whether it would be Iran, whether it be Latin America, the Middle East, the jeetu, that will make it more difficult.

 
Marta Martinez 

Okay, so let's do something for the last five minutes. Round Robin, your expectations for 2020? What do you want to see happen? What do you wish happened? Which might be or might not be the same? Let's start with you, Louise.

 
Louise Martens 

I'm very curious to see what platforms like TikTok and Quibi will do so short form, video, and how that will change user interactions, what we think about creativity, new formats, new ad formats rising and how marketeers will, you know, need a moment to understand it and then tap into it. So I think 2020 will definitely be about short form video even more, which is very interesting for a content practice. We're always trying to anticipate, of course.

 
Marta Martinez 

Awesome. Pete?

 
Pete Kim 

Continued progress. As we experiment and learn how to forge the new processes of the future. We're going to have to figure out how to be better, faster, cheaper, more integrated, figure out how to get the right creative in front of the right person at the right time. We've been talking about this for 20 years, and we are on the cusp, we are actually there. And it's incredibly exciting. And yet it is also incredibly daunting. And from the front lines I the best I can hope for is that we make steady progress as we have in the past.

 
Marta Martinez 

Wes?

 
Wesley ter Haar 

I think so for me, to new decade. Slightly mind blowing. I think the last decade, the drop ball on how we think about data is really the thing we need to solve now. So I think the political pressure the pressure from culture on how data is being used. Just the wording targeting people the aggressiveness of how we think about this, I really hope we're we're at the start of a reset of doing personalization in a systematic manner. We're going to try and do it in a way that feels like I'm truly being helped because my data is available somewhere and translates to great content translates a great creative translates read experience. And that's, I think, the excitement that we all have on stage. The technology is there, the engineering is there. Up until now, the traditional agencies legacy networks haven't added the empathy. Yeah, I think we're the ideal combo to do so.

 
Sir Martin Sorrell 

I did well, if we just extrapolate beyond the year to the decade because we've said it's the beginning of the decade to I think last decade was you could argue towards the end of the decade the last two or three years, it became increasingly difficult for the traditional model to function, both the traditional market to model the client model and the agency model. This will be the decade this will be the year. You know, what I want to see from us is more of those whoppers, you know, can maintenance. You know, we said we want to double the size of the company every three years organically forget about m&a or whatever. So I want to see main maintenance and continuous progress in that area but really proof that this new era New Age model works. We proven it works at a certain scale. Now we have to prove that it works at very significant scale, and it permeates all reaches not just for the disruptors. But for the disrupted to not just the the threatening, but the threatened. Yeah, and demonstrate that this really works at scale. So that's the the key challenge and I think this decade will be a really tough one. For the holding companies. I think the only route out is dismemberment. Private, go private.

 
Marta Martinez 

Thank you. alright with that, you know, continue pushing the industry as you have for this year in and have a phenomenal CES. Thank you.

 
Sir Martin Sorrell 

Thank you. Thank you.

 
Natalie Novak 

Thank you so much, Marta, Wesley, Pete, Louise and Sir Martin for that great panel. We have three more fantastic sessions today at start at 1pm and then two full more days of programming. So uh, tomorrow and Thursday. So we'll see you back here in a couple hours.

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