WPP's Martin Sorrell: Ad Blockers Haven't Had a Significant Impact on Business Yet
October 26 2015 - 2:48PM
Dow Jones News
By Nathalie Tadena
Ad blocking technologies haven't yet had a significant impact on
the advertising business, said WPP Chief Executive Martin
Sorrell.
"Estimates that have been made so far about the impact of ad
blocking have been on the smaller side," Mr. Sorrell said on an
earnings call with analysts on Monday. "That doesn't mean, by the
way, that we can be complacent about it and it doesn't mean it
won't become important."
The rise of ad blocking technologies, fueled in part by the
release of Apple's new mobile software that allows such apps, is
just the latest online advertising headache facing marketers and
publishers. Despite all the hand wringing, Mr. Sorrell said Monday
that ad blocking concerns so far have been "manageable" and noted
that even if ad blocking is successful, the end result will be an
increase in the price of content for consumers. Some ad-blocking
software developers have experienced pangs of conscience as they
consider the negative impact that ad blocking might have on online
sites that rely on advertising revenue. Mr. Sorrell noted that the
ad blocker app "Peace" was pulled from Apple's app store shortly
after being released.
"Advertising does perform a useful economic function -- it
reduces the cost of content," Mr. Sorrell said.
While creating "more arresting work" is one way to combat ad
blocking concerns, Mr. Sorrell said perhaps the most effective way
to address the issue is for "Google to turn off ad blockers
invading YouTube."
Issues such as ad blocking and concerns about fraudulent "bot"
traffic have added to the complexity that marketers face in a
changing digital media landscape. The advertising industry this
year has been hit by an unprecedented number of marketers
reevaluating their media agency rosters--a "tsunami" of reviews, as
Mr. Sorrell put it. WPP, the world's largest ad holding company, is
considered by investors to be a bellwether for the health of large
companies given WPP's global client list.
"Technology, the use of data and content are critically
important in discerning clients' decision after the issues of
talent and pricing," Mr. Sorrell said of the media reviews.
Clients conduct reviews of their agencies for several reasons,
including a desire to cut back on agency fees and what they pay for
media, as well as make sure their agencies are up-to-date on the
latest marketing technologies and trends. This focus on costs is
the "new normal," as clients face a low growth environment and
limited pricing power, Mr. Sorrell said, adding that he has seen
"some very aggressive moves" on pricing in this year's round of
pitches.
WPP on Monday reported its like-for-like net sales -- a closely
watched revenue measure that strips out costs linked to acquiring
digital media space as well as currency swings, acquisitions and
disposals -- increased 3.3% in the third quarter.
Write to Nathalie Tadena at nathalie.tadena@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 26, 2015 14:33 ET (18:33 GMT)
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