CANNES\u2014The world\u2019s biggest agencies are \u201cstrapped\u201d by their structure and hesitant to experiment, while advertisers are taking back control and experimenting more than ever, according to Sir Martin Sorrell.<\/p>\n
\u201cIt\u2019s not in-housing, it\u2019s part of a much broader trend,\u201d the former CEO of WPP says in this interview with Beet.TV at the Cannes Lions<\/a> International Festival of Creativity.<\/p>\n Sorrell is now Executive Chairman of S4 Capital<\/a>, which is described as building \u201ca new era, digital platform for global, multi-national, regional, local and millennially-driven clients.\u201d When he looks at the six biggest agency holding companies he sees an \u201cadapt or die\u201d scenario.<\/p>\n \u201cThey have no choice. The six of them are like sort of super tankers. They\u2019re not agile enough, they\u2019re not fast enough, they\u2019re not flexible enough,\u201d Sorrell says.<\/p>\n He traces client retrenchment to the days when Lehman Brothers was failing and the world financial system was on a precipice. One recent example Sorrell cites is the acquisition<\/a> by McDonald\u2019s of Dynamic Yield Ltd., which specializes in in personalization and decision logic technology, as a means of \u201ctrying to take back control.\u201d<\/p>\n Other advertiser concerns include platforms controlling data, \u201cproving to be a block to the direct consumer relationship.\u201d Agencies, meanwhile, \u201care worried about incumbency instead of being totally transparent and willing to experiment.\u201d<\/p>\n The net result among marketers is \u201cthe propensity to experiment has risen to a level that I\u2019ve not seen in fifty or the so years that I\u2019ve been in the industry,\u201d says Sorrell<\/a>. \u201cIn-housing is one of the means of experimenting. We\u2019re not just seeing it on programmatic, we\u2019re seeing it on content creation too.\u201d<\/p>\n When agencies negotiate fee structures, \u201cThe level of directs for a new company with a clean sheet of paper is totally different than an established company, a legacy company. With indirects it\u2019s light years difference. You don\u2019t have indirects in a startup.<\/p>\n \u201cThey are strapped. It\u2019s like a straight jacket. So when the procurement people from the agency go to negotiate with the procurement people at the client, they\u2019re locked into a structure that the client\u2019s not willing to accept. So that\u2019s the fundamental problem. You have to have a totally new structure.\u201d<\/p>\n He references his trip last year to the Burning Man<\/a> festival, which is held in the desert in Nevada, as an allegory for what agencies are facing. \u201cIt\u2019s creative reconstruction or destruction. Every year eighty thousand people build the burning man, they build the temple and they burn it down at the end of the week and they start again.\u201d<\/p>\n