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That seemed like a throwaway remark at the beginning of Sir Martin Sorrell’s keynote speech at Leaders Sport Business Summit. But by the end it felt like a key theme, as he outlined what he sees as the ten crucial aspects of the current global marketing landscape, highlighting them as potential opportunities – or threats – for those involved in sports business.
His first point was the shift in world economic power to the east and south, whether that be in global terms with the rise of China, India and Brazil – “We’re betting the future of WPP on the success and growth of China,” he told the conference – or in Europe with the continued strength of Germany and the resurgence of Russia and Poland. And he emphasised the importance of sporting events in changing the perception of the host city or country around the world.
“President Putin sees sport as a means to reposition Russia,” he said.
Secondly Sir Martin highlighted the continuing overcapacity in most industrial sectors. This, he said, impacted sports sponsorship in two ways; firstly its value in helping to inspire staff at a time when finding, retaining and motivating talent is a huge challenge. Then in driving up the value of sports sponsorships as the need for differentiation becomes paramount. And he cited the recent bidding for sponsorship of the automotive category at the Brazil World Cup where the rights went for more than twice what WPP had predicted.
The third point was the rise of the web. Sir Martin mentioned its power to disintermediate established businesses, its attractiveness to young people, and its ability to offer engagement with customers though what he described as five legs: search, display, video, social media and mobile, particularly mobile search.
His fourth point was the growth of retail power, particularly e-commerce which, he said, means “Manufacturers have the chance for the first time to jump over the heads of retailers and establish direct relationships with customers”.
Fifth was the importance of internal company communications. According to Sir Martin, more than half of what WPP does is building internal alignment.
“The big challenge is getting people to buy into the strategy and purpose of the business,” he said. And he urged the audience to think about the ways that sport can help businesses in this area.
Sixth was the changing nature of global and local structures. Sir Martin said he was seeing decisions taken at the top of global business not being harmonised through the organisation, an issue with particular relevance to sport.
“If the CEO decides to sponsor something, the argument becomes about who should bear the cost,” he said. “If it’s done at the centre it’s a disaster, because the individual countries fell they have no involvement. But if it’s done at a local level, it can be something that has no relevance elsewhere.”
The power of finance and procurement was Sir Martin’s seventh point, something that he said was leading to a culture of risk-aversion among companies, particularly around mergers and acquisitions.
“This is something I bemoan,” he said. “We need a better system to evaluate deals.”
His eighth point was the growth of government, particularly city government. He noted that half the world’s population currently lives in cities, a number predicted to rise to 70% by 2030, which means, as he said, that government isn’t going to go away. He pointed out that a lot of decisions are now being taken at city government level, and returned to his view of the importance of sporting events in changing the wider perception of cities.
The acceptance of CSR was Sir Martin’s penultimate point, and in particular the change in the way CSR has been viewed over the past few years.
“CSR is now of critically important to the strategic purpose of our clients,” he told the conference. “It’s at the centre of all strategic decision-making.”
His final point was about industry consolidation, which he said he expected to continue, in turn making sponsorship properties more valuable.
“How far can investment in sport go?” he asked, rhetorically. And his answer was “much further” as content becomes more and more important in the mix of marketing communications.
“Sport is essential and critical to all stakeholders in our ecosystem,” he said, “because it has a tremendous emotional connection.”