Sir Martin Sorrell warns of threat from e-communities

By Emiko Terazono in London
Published: June 21 2006 03:00

Media owners must find ways to attract and retain talent and create stand-alone digital divisions in order to compete in the era of internet blogs, open access and online communities, Sir Martin Sorrell, the chief executive of WPP, has warned.

The head of the UK advertising group also acknowledged the difficulty of competing against websites that destroyed business models. "How do you deal with socialistic anarchists?" he asked, referring to Craigslist, the popular, free classified advertising site that has been threatening revenues at US city newspapers.

"The internet is the most socialistic force you've ever seen," he added, noting that the response from some media groups had been to offer their content for free in traditional and digital form.

"They have decided - 'if I don't eat my children, somebody else will'," he told executives from UK regional newspapers attending an industry conference, adding that he disapproved of giving away content for free. "You should charge for it if the consumer values the content," he said.

Sir Martin believes that the shortage in human capital would be one of the main challenges facing companies in the future, and successful companies were those that could "find, retain, and incentivise good people".

Young people, accustomed to quick response on the internet, were shunning hierarchical organisations where decision-making took a long time.

"You saw this in the first web boom and you're seeing it now . . . There are significant changes in the attitudes of young people. They would rather work in smaller, less bureaucratic companies."

Companies also needed to acquire or create separate online operations or divisions to run alongside digital operations built on traditional media brands he said, pointing to Rupert Murdoch's News Corp purchasing, a social networking site. "You have to set up separate verticals in order to move quickly enough," he said.

Sir Martin said that while his agencies and Google were co-existing, the search giant could make life difficult for the advertising industry. "We are Google's third-largest customer, but on the other hand they are talking about an electronic media buying and planning exchange," he said referring to a service where advertisers can buy and plan their own media campaigns without going through agencies.