rifts and dislocation

Chapter 2

Industry outlook by Sir Martin Sorrell

During the last two years the shifting tectonic plates underpinning economic and political activity around the globe came together to release a series of powerful disruptive forces that have thrown the world into a heightened level of uncertainty for the near to medium future.

Sir Martin Sorrell

In the Middle East, a political earthquake was triggered by the clash of ambition between regional players in the form of a new conflict focused on Israel and Gaza; the war in Ukraine ground on and the standoff between China and the US showed no signs of easing; artificial intelligence underwent a step change in evolution and public consciousness; and catastrophic climate change moved a step nearer as 2023 became the hottest year on record.

The aftershocks of the pandemic continued to rumble on in the form of new working practices, unprecedented reliance on technology, and an epic overhang of debt which combined with supply chain disruption to sustain damaging inflation and growth-sapping interest rates around the world. And as the population of India overtook that of China for the first time, emerging powers competed for influence in the race for leadership within a new multipolar world.

10 things to think about

  1. The world is now changing from the 40 years since Professor Ted Levitt’s ‘Globalization of Markets’ was published in the Harvard Business Review in May/June 1983.
  2. GDP growth will be slower, inflation higher and interest rates higher than before.
  3. US/China relations, Russia’s ambitions in Ukraine and beyond, Iran’s aspirations in the Middle East, along with North Korea’s volatility, all mean increased instability.
  4. In this new world, two trends are particularly important for our clients and us. First, pick your geographic markets more carefully, mainly in the Americas, the Middle East and Asia Pacific. Second, efficiency becomes more important. AI, the metaverse, blockchain and quantum computing will drive this efficiency gain everywhere, but particularly in lower-growth Europe.
  5. In this new world, clients have to focus on three things: agility; taking back control of their marketing; and first-party data.
  6. Digital will continue to dominate media spend from 65% now to more than 70% by 2025.
  7. The six major platforms – Alphabet, Meta, Amazon, Alibaba, Tencent and ByteDance – plus Apple, Microsoft, Nvidia, Adobe, Oracle, Salesforce and Musk will continue to dominate digital media.
  8. Clients and private equity will continue to focus on short-term results, so activation, performance and measurement have become ever more important.
  9. Connected TV and retail advertising will become more and more important as linear TV remains under pressure.
  10. AI will drive major changes in visualisation and copywriting, in hyper-personalisation, in media planning and buying, in client and agency efficiency and in the democratisation of knowledge. As a result, companies will have flatter organisational structures and become more efficient - just as Nvidia does driven by AI.