Dec. 15, 2022

Why this Recession Will Be Unlike Any Other

And how it will impact you

Live from Web Summit in Lisbon, Nora interviews legendary advertising expert and executive Sir Martin Sorrell, the founder of British marketing giant WPP. He explains why this recession will be different from all previous ones, what this means for you, and how to weather the tough economic climate. For more info on our presenting sponsor, check out


Host: Nora Ali

Producer: Raymond Luu  

Video Editors: Sebastian Vega and Evan Frolov 

Production, Mixing & Sound Design: Daniel Markus & Rosemary Minkler

Music: Daniel Markus & Breakmaster Cylinder

Fact Checker: Kate Brandt 

Senior Producer: Katherine Milsop


Full transcripts for all Business Casual episodes available at


Nora Ali: For Morning Brew, this is Business Casual, bringing you convos with people you know and some you may not know yet, to make business less intimidating. Because money talks, but it does not have to be dull. I'm your host, Nora Ali. Now let's get down to business.

Today, we're bringing you another conversation recorded live on stage from Web Summit 2022 in Lisbon, Portugal. Web Summit is the world's largest technology event, featuring speakers and leaders from some of the world's biggest companies and innovators in tech. I had a chance to interview legendary advertising expert and executive Sir Martin Sorrell, the founder of British marketing giant WPP, the world's largest advertising agency group, with $17.6 billion in revenue reported in 2021.

WPP has weathered several major global economic recessions since its founding in 1985, and with another one on the horizon, we talked about why this recession will be different from all previous ones, and what this means for you. Sir Martin offered some key insights, including why he believes that marketing in general is going to see a move away from brand and awareness to activation, performance, and return on investment. He also explained why he believes, given current geopolitics, the tough economic climate will likely remain this way for the next few years. An enlightening if sobering conversation. That's all next, after the break.

Hello, hello, hello.

Sir Martin Sorrell: Hi, Nora.

Nora Ali: We made it. Great to see you all. Thrilled to be having this chat. I'm Nora Ali, joined by legendary Sir Martin Sorrell.

Sir Martin Sorrell: In my own mind, yeah.

Nora Ali: In your ends, and your whole family loves you too, Sir Martin.

So let's start with some context. You started WPP into the advertising giant it is today over 30 years ago. What did the context, the landscape of marketing look like back then? Who were the big players?

Sir Martin Sorrell: Well, obviously it was very different, and I think when you try to answer a question like that, you look at things in two funnels. One is geographic and one is technological. When I started, well, I would draw back before WPP to Saatchis, because I was CFO at Saatchis from 1977 to 1985. That was the era of globalization. In fact, in October of 1983, and everybody should go back and read the article, there was a famous business school professor called Ted Levitt, professor of the Harvard Business School, who wrote an article about globalization, that consumers would consume everything in the same way everywhere. That was in 1983, October 1983.

That really was the beginning of the geographical growth. When I was at B school, in my class was the son of the chairman and CEO of Procter & Gamble, and Procter & Gamble was regarded being a global company in 1968, but only 10% of its sales came from outside the United States. The first phase was globalization. Wherever you planted your flag, you won, as long as the demographics were in your favor.

WPP from 1985 to 2018 was in the era of continuation of globalization. Again, planting the flag in the Americas, in EMEA, in Asia Pacific. But at the same time it was about the beginning of the growth of technology. I think I remember being interviewed by HBR in 1997, and talking about the internet and how it was starting to impact our business. Really, WPP was about globalization and technology.

S4, which we started four years ago, is purely about technology. I think that some of the tragic events that we're going through at the moment mean, unfortunately—and I think this is to our mutual disadvantage—the world is going to grow more slowly. Energy prices are going to be higher, inflation is going to be higher permanently than we, or certainly for the foreseeable future than we would like it to be.

All this has implications for branding and marketing on a global scale. Really there were those two buckets, and the pendulum has swung from globalization. I wouldn't say the world is necessarily deglobalized, but it's becoming much more fractured and much more fragmented, and a lot more focus is going to be on regional and different countries.

We can run through...basically I'm bullish on North and South America. I'm bullish on the Middle East and bullish on Asia-Pacific. Maybe with the condition about what's happening in China, both in terms of Covid, zero Covid policy, but more importantly about what may or may not happen around Taiwan. The war in Ukraine sets a number of precedents, I think, for how the Chinese, and indeed the West, will deal with the security issues around Taiwan. So hugely complex as the background to what we are going to talk about, about marketing in a recession.

Nora Ali: Exactly, so let's get to that. WPP weathered a couple of recessions.

Sir Martin Sorrell: More than a couple.

Nora Ali: More than a couple. Big ones being the dotcom bubble, the Great Recession, 2007 to 2009. What were some of the biggest learnings from those recessions that you would advise advertisers to take away going into this impending recession, whatever your definition is of that?

Sir Martin Sorrell: Those of you in the audience who are of the Jewish persuasion will know that on Pesach, on Passover, we say on the first night, we recite a prayer called the Ma Nishtana. The first question is, "Why is this night different to all other nights?" So the question about the recession is, why is this recession different to all other recessions?

The current situation we face is different, in my experience. It might be old age that's bringing this on, but is very different to what we've seen in the past. Now if I go back to the oil crises of the 1970s; the recession of 1992—which was life-threatening, an existential threat for WPP; the internet bust of 2002; the great financial crisis of 2008. In each of those cases, you saw a way out. Unfortunately, if I said that the three big issues at the moment are the lack of relationships between the US and China. The second is we're going through a terrible conflict in Ukraine, and the third thing is Iran. We are seeing a significant uprising in Iran. I hope from a personal point of view that it gains traction, but I worry that it won't. Those three issues are very difficult to solve.

The other recessions that we've had, obviously it rippled into other areas. The internet bust was about the web and technology, but it rippled into other areas, but you could see a way through. Again, I don't want to be defeatist about it, so we have gone through this before, but it really is...I think it's really difficult at the moment and very complex.

For marketeers, this is going to be a very big challenge, and everybody talks in the industry...quite rightly, they try and take the high ground. They try and say that all the precedents show that companies that continue to invest in brand, in marketing, and double up or double down, as they say, that's the best thing to do. Because as you emerge from the recession or the slower growth, you benefit. The pressure from CEOs, from the financial function and from the procurement function on ROI measurements, returns, short-term returns, is huge, and the net result is there's a move away, whether we like it or not in the marketing profession, away from brand and awareness to activation and performance, and measurement and ROI.

All the things that sort of get our goat a little bit, because we want to see people invest in brand and upper funnel stuff. The reality that is not going to be the case next year. It's not going to be the case in 2024. I think we probably have to wait until we're out of this economic pressure, which may come after the US presidential election in 2024.

Nora Ali: We're going to take a quick break. More with Sir Martin Sorrell when we come back.

Well, with all of this geopolitical general global uncertainty, if you are a CMO today who is getting pressure from your CEO. Let's talk a little bit more tactically. Where should you be spending your marketing dollars across platforms, across different areas?

Sir Martin Sorrell: I mean the big difference, going back to your original question, is today 60%, 65% of client budgets are spent in the digital area. Media last year was $750 billion. $450 of that was digital. $200 of that was on Google, $115 was on Meta, $30 of that was on Amazon. TikTok rising; we don't know what the TikTok figure is. I've seen a Wall Street Journal figure of $90.

Those are the key platforms. Apple has become more and more because of IDFA changes. Obviously, it had an impact on Meta. But Apple itself is becoming an increasingly important advertising platform, probably around $7 billion in terms of spend.

That's where a lot of the attention is currently, and the forecast is that by 2025, 75% of that is going to be in digital. Linear is going to come under increasing pressure; analog is going to come under increasing pressure. It's interesting. Advertising as a proportion of GDP in the US is forecast to rise even after the recession from 1% to one and a half percent.

Then the other thing that's driving that is that digital transformation, itself a $300 billion, $400 billion industry. Addressable market is going to continue to accelerate. Because next year you'll have the pressure on the top line and there will be also pressure for cost reduction and efficiency. All the change agents who didn't get oxygen when times were good are going to get oxygen when times are tough and people are looking for savings.

Nora Ali: You mentioned the tracking changes that Apple has implemented, and that's where users have to opt in to tracking versus opt out. Facebook has used that as an excuse in part to explain away their decline in advertising revenue, so down 4% year over year. In this latest quarter, how much is that warranted, that explanation for Facebook? And second question, to what extent do you think Meta's investment in AI is going to help them achieve higher ROIs on advertising?

Sir Martin Sorrell: Well, I think Meta comes in, dare I say it, it will be an unpopular thing to say. If there's any problem, any evil, anything that people are upset about, it's always Meta's fault or Facebook or Mark Zuckerberg or whatever it is. They've become the whipping boy or whipping girl for all the evils, and I think that's unfair and it's wrong.

That doesn't mean they haven't made mistakes. Their problem is they tend to be upper funnel, they tend to be more about awareness, and their products maybe have lost some of the new sheen that a TikTok has, or others. Or Snap had for a time, although they faced challenges as well from Apple, IDFA, and the deprecation of third party cookies.

There are two things that have happened that have real significance. One is IDFA, so move to cohorts rather than individual targeting. The second thing is the deprecation of third party cookies, which again has been delayed, the implementation, but has huge consequences for our clients. It means that our clients are going to have to focus increasingly on first party data, and ironically, the signals from the platforms.

So Google's decision on third party cookies was really shrewd because ultimately it means clients have two sources of data. No longer third party; first party data. Consented, so get over the privacy hurdle, and then the signals from the platform. So, huge.

Now, you see with the walled gardens that a Target is building, or a Walmart is building or a Walgreens is building. You see the retail marketing answers to that, so building their own walled gardens. But essentially the platforms are increasing their power by doing that, and that applies to the Chinese platforms as well. It's quite a much more complex environment for our clients to negotiate, but essentially it's driving more and more spend into personalization at scale, one-to-one communication, and individualized communication.

Nora Ali: We're going to take a quick break. More with Sir Martin Sorrell when we come back.

What's your advice to advertisers who are trying to assess what to do with their ad dollars on Elon Musk's Twitter, especially when their dollars are tighter going into the recession?

Sir Martin Sorrell: It's early days. It's less than a week than he walked in with the kitchen sink. It's going to take time to figure it out, and frankly, even in the first week we've had inconsistencies. On the one hand, we get the tweet to advertisers saying, I love you, basically, and I want to build a relationship with you.

Then you have the issue: Now is he going to let Trump back on? When Trump was taken off, I think I'm right in saying that Twitter's users jumped by about 21%. So he has to make a call, and basically our clients want to avoid controversy. It's not a surprise that everybody's saying wait and see. It's too early. But he has to develop, in my view, a much more consistent approach. I mean from what I...I was in New York yesterday, talking to a number of people that he has been talking to in the industry. He's clearly trying to put out feelers to try and understand.

I mean, one of the problems with Twitter has been they've been quite rigid in their contractual negotiations with clients. They've been unwilling to bend their conditions. They're going to have to be more flexible.

The moderation policy is hugely important. I mean, he's announced he's going to have a moderation council, but then he tweets about Pelosi. It's really going to be difficult, I think, for him to steer a course where our clients have sufficient confidence on the moderation front. That's the key issue.

If he can demonstrate close control, and coming back to Alphabet and Meta, they have made huge investments—I think you probably have got about 30,000, maybe 40,000 people on those two platforms who are moderating content. We're going to have Section 230 potential changes. I mean, that's in the wind. There may be changes in terms of Section 230 in the US which is going to throw all this into the spotlight again.

The critical issue for him is what's he going to do on moderation and moderation policy. Until that's sorted, most of our clients are not prepared, they don't want any controversy. They have enough to deal with, with the geopolitical stuff we've just discussed, the recession, with the slowdown in growth, without having to worry about this sort of stuff. It's not a surprise that GM have stalled, that IPG have stalled, that L'Oréal have stalled. I think you will find that generally clients are basically saying, wait and see.

Nora Ali: Well, we're going to have to leave things there. We're out of time, Sir Martin.

Sir Martin Sorrell: Time's up.

Nora Ali: Time's up. We're getting the lights. Thank you so much.

Sir Martin Sorrell: Thank you very much indeed.

Nora Ali: And thank you all. This is Business Casual and I'm Nora Ali. You can follow me on Twitter @NoraKAli and I would love to hear from you. If you have ideas for episodes, comments, thoughts on episodes you loved, fun segment ideas, feel free to shoot me a DM and I will do my very best to respond. You can also reach the BC team by emailing, or call us. That number is (862) 295-1135. If you haven't already, be sure to subscribe to Business Casual on Spotify, Apple Podcasts, or wherever you listen. If you like the show, please leave us a rating and a review. It really helps.

Business Casual is produced by Katherine Milsop and Raymond Luu. Additional production, sound design, and mixing by Daniel Markus, Rosemary Minkler, and Nick Torres. Kate Brandt is our fact checker, and AB Silver is our senior booking producer. Sebastian Vega and Evan Frolov edit our videos. Music in this episode from Daniel Markus and the Mysterious Breakmaster Cylinder. Thanks for listening to Business Casual. I'm Nora Ali. Keep it business, and keep it casual.