Sir Martin Sorrell, the chief executive of WPP, has warned Facebook and Google to acknowledge that they are “media companies and not technology companies” or face losing advertisers’ faith.
The WPP founder also spoke of the need for the social media giants to address issues around “brand safety” and fake news after controversies in recent months.
Sorrell told City A.M. that the companies’ advertising revenues have not been hit by the issues in the first quarter of this year, but predicted that this could change.
“When you have a duopoly, clients and agencies are looking for alternatives,” he said.
“Unless they acknowledge that they are media companies and not technology companies and therefore have the same responsibilities [as the news industry] for the truthfulness of their content that appears on their pages, until that happens, there could be a problem.
“After they’ve acknowledged that, and acknowledged a responsibility, I think there’s an opportunity they’ll continue to grow.”
As well as fake news controversies, Google and Facebook have been forced to confront issues around brand safety this year after reports of adverts being placed next to extremist content.
“Google has made some pretty strenuous efforts to change things, and should get some credit for doing that,” Sorrell said.
On Facebook, Sorrell added: “I don’t think they’ve been as aggressive as Google in dealing with the problem, because they probably haven’t had it as prominently, but that has changed.
“Mark Zuckerberg did spend the first part of their app developers conference talking about it, so obviously it’s high on their priorities. So I think they are making efforts, but not as much as Google. I think Google is making strenuous efforts.”
WPP’s share price dipped two per cent to 1,680 on Thursday after the FTSE 100 company reported its first quarter results. Revenue jumped 16.9 per cent to £3.6bn, but this would have been 0.2 per cent without acquisitions and currency fluctuations.
The advertising industry was hit by uncertainty around the Brexit vote last year. Sorrell said that there could be more uncertainty in the run-up to June’s General Election. But he said that an expected victory by Prime Minister Theresa May would provide “more clarity in terms of her negotiating position”.
“It gives her more wiggle room, it gives her more time, and probably more control over the negotiations,” he said. “Although I’m not sure that [the Tories will] do as well as the polls indicate… I think the Lib Dems will do quite well, Labour will probably have a very tough time.
“But all in all, it will give her more wiggle room, more negotiating room. She’ll be able to control things a bit better.”
He added: “But I still worry about a hard Brexit, with the uncertainty that emanates from that. So it’s not so much the uncertainty of an election. In fact, if anything, the election helps, on the assumption that she gets an increased majority. But it’s more of the uncertainty that was there anyway around Brexit.”
Asked how damaging it would be if May wasn’t to win, Sorrell laughed, telling City A.M.: “It depends on who would replace her. I can’t believe that that would happen. You seriously suggest that as a question?”
Sorrell is also confident that US President Donald Trump could prove good for his business.
“I think Trump can be helpful if he can implement his economic policy,” he said. “What he’s promising to do is helpful from an economic point of view, but the question is whether it can be implemented…
“It’s a question about the taxation changes, the infrastructure and the anti-regulation. If that gets pushed through then it’s probably good news.”