Sorrell seeks cleaner web
WE SHOULD not be too surprised that Sir Martin Sorrell is urging digital giants to ‘ step up control’ of their platforms.
Speaking to CNBC in China, the chief executive of advertising giant WPP told Google, Facebook et al that it is time they cleaned up the content, including fake news, appearing on their sites.
Big advertisers such as Marks & Spencer have pulled commercials because of concern that they may appear alongside offensive extremist content. French advertising giant Havas recently withdrew its ad spend from Google and YouTube.
As a powerful voice in global advertising, Sorrell’s intervention is as much about self-preservation as anything else. WPP is a forceful proponent of digital marketing and has scoured the globe for acquisitions designed to strengthen its domination of the online channel. WPP’s digital platform Xaxis is a disrupter and is to advertising what uber is to transport and Airbnb to vacations. It uses big data, code and algorithms to change the way media buying works.
Xaxis ignores traditional market research and personal knowledge of clients. It uses technology which increasingly bypasses terrestrial TV and newspapers, and places its faith in the ability of the cyber giants to link advertisers more directly to interested consumers. We have all experienced this with intrusive pop-up ads related to previous purchases and personal searches.
The tricky part of this is that many of the digital pioneers are fundamentalists when it comes to belief in the freedom of the web and only very reluctantly put in safeguards, as has been the case with child pornography.
We saw just how stubborn these firms can be about blocking access to their systems when Apple refused to open its iPhone systems to the FBI after the San Bernardino killings in 2015. When Snap Inc floated on the New York Stock Exchange this month, the hype was around growth with little discussion about the popularity of the app among young people using it to sex-text each other body-part photos.
Do fast-moving consumer goods firms, retailers and financial groups really want their ads springing to life on such sites?
Sorrell says that blanket withdrawal of ads across digital platforms is not the answer. As Mandy Rice Davies famously said: ‘He would, wouldn’t he.’
Mixed signals
INDIA is often cited as a terrific place for British firms to do business post-Brexit.
Vittorio Colao of Vodafone may care to differ. The arrival of Reliance Jio as a player in the crowded telecoms market with a ‘free’ 4G service has played havoc with established players. In the UK-EU, the challenge from India’s richest person Mukesh Ambani through Jio might have provided grounds for a predatory pricing hearing.
In India, that doesn’t seem to work. Vodafone’s response is to forge a $23bn (£18bn) deal with Idea Cellular, creating a behemoth with 400m customers, making it larger than market leader Bharti Airtel.
The winner in the transaction looks to be Idea investors as its shares jumped 14.3pc on the announcement and Voda fell 0.4pc. With a 45pc stake, Voda will be the biggest shareholder in the new company. But the chairman and chief financial officer will be chosen by Idea and both companies will have to approve the choice of chief executive and chief operating officer. Such shared lines of control have a habit of misfiring.
On the plus side, Voda gets the chance to cut its net debt by up to £6.6bn. Voda’s foreign entanglements have a mixed record. After running up big losses in Japan, it sold out to Softbank in 2016 and eventually wrote down its operation by a huge £28bn.
In contrast in America, it ended up as a minority partner in Verizon Wireless, but was able to sell its interest for a massive £97bn. If the cut-price operators in India could be eliminated, then maybe Voda will eventually clean up – after all, it is a vast market. But this is no slam dunk.
Two’s a crowd
DOUBLING up chief executives seldom works, even if, as in the case of Aberdeen-Standard Life, roles are clearly defined.
Putting to one side the Chuckle Brothers arrangement for Martin Gilbert and Keith Skeoch, investors don’t much like the deal. Some £900m has been sliced off the market values of the combined companies, despite promised savings.
Standard chairman Gerry Grimstone ought to be enough of a grown-up to tell one of these fishing friends to sling their hook.