Sorrell warns of dangers of 'over-monetising' social networks
Sir Martin Sorrell has cast doubt on the ability of social networks such as Facebook and Twitter to turn their huge user numbers into big profits.
The chief executive of marketing services giant WPP was speaking after reports this week that Facebook has delayed its flotation until the end of next year, and an analyst's claim that Mark Zuckerberg's company had missed its revenue targets.
"I have some fundamental doubts about the ability to monetise social platforms," Sorrell told the Royal Television Society Cambridge Convention on Friday.
"If you attempt to monetise it, it's risky, there are question marks," he said. "Facebook, Google+, Twitter … is a social interaction. We used to write letters to each other and now we correspond through Facebook and Twitter and other forms of communication. If you interrupt that with a message you may run into trouble.
"Mark Zuckerberg tried two failed experiments – Beacon and one other – which were withdrawn in 24 hours after a revolution on Facebook."
Sorrell said influencing social networks was an "extremely powerful way of building brands, building trust and building reputation", such as by users recommending products to each other.
"But it is a dangerous territory if you try to over-monetise it," he added. "I'm not sceptical about social media, I'm concerned about when you monetise it because by it's nature it's me talking to you electronically, digitally. If I'm talking to you and I send you a commercial message how do you feel about that? If i say 'buy this' or 'do that', it's not the right context."
Sorrell said: "Somebody asked me whether I thought Facebook was worth $15bn and I said no. It just shows how stupid I am because it's now being talked about at $100bn so what do I know?"
The WPP chief executive also repeated his belief, first expressed in an interview last year, that governments may have to subsidise newspapers if they are to survive.
"We have to try and think about how we preserve journalism other than people like [New York Times investor] Carlos Slim, like the Barclays, like Warren Buffett … subsidising it by buying them as trophy properties," said Sorrell.
"You have to find some way of ensuring that professional journalism particularly in newspapers is preserved," he added.
"There has to be some form of subsidy. You can't rely on Warren Buffet or the Barclay brothers or the Scott Trust [the sole shareholder in Guardian parent company, Guardian Media Group] to preserve these institutions."
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