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Davos 2023: Sir Martin Sorrell on why ChatGPT could be a threat for media agencies

At the World Economic Forum in Davos, Sir Martin Sorrell shared his views on the impact of tech like ChatGPT on ad holding companies.

By  Storyboard18Jan 19, 2023 7:04 AM
Davos 2023: Sir Martin Sorrell on why ChatGPT could be a threat for media agencies
While speaking at the World Economic Forum in Davos, Sir Martin Sorrell says that the tech platforms are developing technologies that can plan and buy media directly with clients in a very effective way. (Representative image via Twitter by @ForbesCMO)

Sir Martin Sorrell, founder and executive chairman of S4 Capital plc, believes that new tech tools such as ChatGPT, a software application designed to mimic human-like conversation based on user prompts, have the ability to threaten big holding companies in the advertising world. He even envisions a future where OpenAI’s ChatGPT (in which Microsoft has invested $10 billion) could eventually replace media buying and planning, “and it would be very effective”.

While speaking to the India Today Group at the World Economic Forum in Davos, Sorrell said that the tech platforms are developing technologies that can plan and buy media directly with clients in a very effective way.

“That is a massive problem for the holding companies because it attacks the largest holding company in the world,” he noted.

Noting that almost all big holding companies in advertising including WPP, IPG Group, Dentsu and Publicis depend for almost half of their profitability, on media planning and buying, Sorrell said that these companies are going to come under increasing attack from technological changes that we are going to see, some generally driven by data.

“They could be out of business unless they adapt. I think it's really a fundamental shift which could take a few years. But the technology is there, it has to be refined,” he added.

“I think people are underestimating the impact that this (AI) will have because machines over time, can be trained to do, with more and more experience, to do quite complex tasks, certainly much more complex than we currently think. So I think that's one of the issues. But I think the impact will be more profound,” he further added.

Sorrell highlighted that technology is changing the marketing and advertising landscape and hence his company’s focus is on digital, so much so that 50 percent of S4 Capital’s revenue comes from tech-focussed business.

Talking about key advertising trends, Sorrell said that digital transformation and measuring the impact of ad dollars is going to dominate the ad market.

“Two things – One is moving down the funnel as we call it to activation and performance. So there will be an emphasis on volume, revenue growth, ROI, media mix modelling, and digital spend which is easier to measure. And then secondly, digital transformation because margins are going to be under pressure because costs they won't be able to get the price increases margins, but most analysts are forecasting that earnings will be down. There will be a correction on earnings and there will be pressure on margins.”

First Published on Jan 19, 2023 7:04 AM