LONDON: WPP Group, the agency holding company, is adopting a strategic venture capital approach as it looks to drive further growth in digital, which now accounts for a third of its revenues.
"We think in order to stimulate digital growth – which is now 34% of our business, and make it even more significant, getting into the 35-40% range – we have to do that," chief executive Martin Sorrell told Reuters TV as he discussed first quarter results.
"We're focusing on fast-growth markets .. on digital, direct and interactive .. online content .. we're making a lot of very interesting investments," he said.
He also noted the development of a "bifurcated strategy" on the client side.
"One is clients investing in Asia Pacific, Latin America, Africa, the Middle East, central/eastern Europe and in digital, and then in western Europe and in the US, squeezing capacity but maybe investing a bit in brands," he explained.
Speaking earlier at the FT Digital Media Conference in London. Sorrell had gone into more detail on the company's digital figures, outlining how News Corp was currently the biggest recipient of WPP's digital spend, on $2.6bn, but would soon be overtaken by Google, close behind on $2bn.
Google was, declared Sorrell, "a media owner masquerading as a tech company" and its success was because it had "five legs to its stool": search, display, video, social via Google+ and mobile.
Sorrell also highlighted a "disconnect" between consumer media use and adspend. While the proportion of time spent on TV, outdoor and radio mirrored advertising investments, there were major discrepancies in two areas.
These were newspapers and magazines, where advertisers were investing 20% but consumers spending only 7-9% of their time, and internet and mobile where people were spending 30% of their time but media were only investing about 20%.
Data sourced from Reuters, TechCrunch, Financial Times; additional content by Warc staff