Sor­rell seeks cleaner web

Daily Mail - - City & Finance - Alex Brum­mer CITY EDITOR

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.

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