A Zillion reasons why Sorrell might be right

Ray Snoddy, former media editor of the Times and the FT and current presenter of the BBC’s Newswatch will be writing weekly for MediaTel NewsLine from mid-May. Here’s a taster of what’s to come with Ray’s reflections on a conference session and interview with Martin Sorrell at MIPTV in Cannes last week, and on Zillion TV’s new targeted, disruptive technology.

Sir Martin Sorrell, chief executive of marketing services group WPP has long ago acquired the honorary title of sage, if not actual oracle.

In previous more gentle times he talked of bath-shaped recessions and then refined his analysis to include baths with ribbed bottoms.

Sir Martin is not keen to coin a single phrase to characterise this recession (although L-shaped was mooted a few weeks’ back) but he has been warning again just how nasty this year will be with no green shoots anywhere to be seen.

The Sage of WPP believes that it will be 2010 before there are any real signs of recovery and then it will be “pretty anaemic” and a gentle incline on the way out.

Sir Martin has the ability to turn himself into a one man forecaster because he has at his command the eyes and ears of 130,000 WPP employees around the world and he knows precisely what is happening to all his businesses as he reviews daily returns from them on his BlackBerry.

He can therefore say with some authority that India and China are not in recession, merely suffering a downturn, and that for reasons that are not entirely clear Latin America – and Brazil in particular – seem to be “defying gravity” and are hardly suffering at all.

An interesting international perspective but after all there are lots of forecasting bodies.

Even this week the Institute of Practitioners in Advertising were doing their stuff with their quarterly Bellwether report producing the tiniest glimmer of hope. There has been a rise in confidence between the glacial last quarter of 2008 and the first quarter of this year. The best the IPA could come up with was the fact that 14 per cent of companies now think their prospects have improved compared with only 5 per cent the previous quarter.

Sir Martin however goes further than mere economic forecasting and taking the world’s financial pulse.

In a virtuoso performance at last week’s MIP conference in Cannes he issued a number of stark warnings about the future of the media business that caused a few sharp intakes of breath.

The media world, Sir Martin believes, is never going to be the same again. Those who think that all they have to do is ride out the recession and resume normal service again are kidding themselves.

“This recession changes our industry forever. If I were a media owner, and in particular if I was in one medium in one country, such as ITV in the UK, I would be very nervous,” Sir Martin warned.

The WPP chief executive is also pessimistic about the future of the press – apart from more specialist publications such as the Financial Times and the Wall Street Journal.

Sir Martin has long been a critic of newspapers handing out their expensively collected information for free on the internet. Now that the horse has bolted it may be too late to do much about it.

In what is now close to a present day truism Sir Martin believes that the only viable way forward for media owners is to seek global reach for their products on as many new platforms as possible, particularly mobile.

But that is only half the story. Sir Martin also warned his audience, who came largely from the content production industry, that the current economic turmoil combined with the digital evolution would inevitably shake up the way content producers and media owners operate.

“Production models are too expensive and will have to change,” he insisted.

Everyone was looking for value and greater accountability on costs.

Here again these are not just mere words. The WPP chief executive can actually make some of the trends he is predicting happen. WPP deploys between $50 billion and $60 billion in advertising revenue every year and the company can insist on greater value for money.

While conventional television will undoubtedly survive, addressability and targeting of audiences would become increasing important.

And there at MIP was a new American start-up, Zillion TV, aiming to exploit both trends.

Zillion, which has deals with all the American studios, takes content direct from the internet to the TV and plans to give away their connector “boxes” – in effect narrow bars that sit astride the top of a flat screen TV – and plan no subscription charges.

Instead viewers will be able to decide whether they want to pay an on-demand charge or undertake to watch a few advertisements in order to receive the movie or television programme for free. Viewers can also opt to receive only those advertising areas they are interested in – such as holidays or cars for example.

Zillion TV is now beta testing in 20,000 American homes and plans to launch in the autumn in the US.

Then next year just as Sir Martin’s “pretty anaemic” recovery is getting under way, Zillion plans to launch its disruptive technology in the UK and other major European markets.