Sir Martin Sorrell, the chief executive of WPP, has said advertisers should think seriously about slashing the amount they spend on newspapers and magazines – and accused Google, Facebook and Twitter of being "media owners masquerading as tech companies".
He said that WPP – which he said spends $73bn (£47bn) globally on buying ad space across media from TV and press to Google and Facebook – had found a huge mismatch in the amount advertisers spend on newspapers and magazines compared to the time consumers spend reading them.
He said that the data related to the US, where WPP spends $40bn annually buying ad space, but that it was probably indicative that most of the world was "going the same way".
"TV viewing is about 43% of consumers' time, [ad] investment is 43%, outdoor [advertising] and radio are about right," he said, speaking at the FT Digital Media Conference in London on Thursday. "The two big [anomalies] are newspapers and magazines. We are still investing 20% [of client ad budgets] but consumers are only spending 7-10% of time. That has to change".
Jeff Bewkes, chief executive of Time Warner, didn't agree that the issue related to magazines. Time Warner owns magazine division Time Inc , the owner in the UK of Marie Claire publisher IPC Media that it is looking to spin off into a separate business.
"At Time Inc rue revenue is down in advertising 6-8% a year, but readership has stayed up," he said. "Young people are reading the same as they were [across platforms]. Not sure I buy the data on reading less, maybe that is newspapers not magazines. As a magazine goes from a glossy picture, think of fashion magazines, they are not going down. With the move on to [devices such as] tablets – pictures, video – there is no reason they can't continue to do what they do now."
Sorrell said that the second anomaly is internet and mobile where in the US it counts for about a third of time spent by consumers, but that the ad spend level is about 20%.
He said that in terms of where WPP invests its $72bn of ad spend on behalf of clients, News Corporation gets the biggest share, clocking up $2.5bn last year.
However Sorrell added that Google is "a juggernaut" with WPP spending $2bn on ads across Google products last year, up a massive 25% year-on-year.
He said that by the end of 2014 Google is likely to supplant Rupert Murdoch's media empire at the top of the list of media owners where WPP spends client money.
"I do regard Google as a media owner, yes," he said. "These are media owners masquerading as technology companies. Google sells Google, Facebook sells Facebook. Twitter sells Twitter."
He said that last year WPP spent about $500m of client ad money on AOL/Yahoo and about $200m on Facebook, a huge boost on the previous year's $200m. He said that the spend on Twitter was "very much smaller".
"If I was going to invest money in all these stocks where would invest my money?" he said. "I would in Google and Amazon. If buying for my grandkids that is where I would put it."
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