Sir Martin Sorrell: 10 observations on the business impact of COVID-19
S4 Capital's Sir Martin Sorrell shares his reflections on how COVID-19 is changing businesses.
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Everybody seems to use the word “unprecedented” to describe the impact of COVID-19 and it is. It’s unlike any other recession, the sub-prime crisis of 2008, or 9/11, or the dot-com bust of 2001-2002, or 1991-1992 or even the crunches of the 1970s and 1980s. I can remember all those, but luckily I don’t remember WWII, having just popped my head out of the womb in 1945. And WWII, is clearly what the Coronavirus silent war most clearly resembles.
How has this nasty disease changed our business? Well, first, it has made every single one of the 2500 people at S4Capital appreciate the work that frontline workers do and the selfless sacrifices they make.
Second, one of our four founding principles is creating a unitary structure and this crisis has drawn us together like no other. I think that feeling will last.
Third, it’s made us all – our people, our clients, everybody – appreciate the power and resourcefulness of digital technology, as we increasingly communicate, shop and educate online. Consumer habits have changed.
Fourth, it will for a significant period of time, maybe permanently, trigger different growth rates amongst various verticals. Tech, gaming, pharma, for example, will grow faster, FMCG/CPG will be up and down, as will retail, and luxury and travel and hospitality, including airlines, will suffer.
Fifth, media will shift even faster to online, as newspapers, magazines and linear TV face increasing pressure from streamers and digital natives.
Sixth, enterprise CEOs, CFOs, CMOs, CPOs and CTOs will embrace digital transformation even faster. They will not be as hesitant to introduce significant change and disruption given the chaos the virus has already caused. There’s no status quo to upset any more.
Seventh, we’ll be examining our use of office facilities more intensively. Our people are on the younger side and are already used to a 24/7 way of working, much of it at home. We’d far rather invest in people and our talent, currently around $250 million per annum, rather than in property, at around $35 million each year. We will work more flexibly in the future between home and office.
Eight, it’s made us much more aware of the power of fiscal and monetary policy to cancel the impact of a crisis, although future generations will have to pay for it. At the same time, it’s clear that the crisis has unleashed incredibly constructive forces to deal with the virus, medically and technologically, even without sufficient international collaboration. So much so that we may see a more V-shaped recovery in certain sectors than many predict.
Nine, the strong will get stronger. The crisis and other developments like the control of data and death of third-party cookies, will enhance the power of first-party data and the signals of the platforms. Clients will have to take back control of their marketing and fuse the holy trinity of data, digital content and programmatic in an iterative, continually improving model.
Finally, it will make us much more conscious of risk analysis. Nobody at Davos, at the end of January, seemed to flag the potential disaster we faced. I’m sure there’ll be another crisis in due course that we didn’t anticipate, but we’ll be much more wary in the future.