Geopolitical issues have made it tough for businesses globally, says S4Capital’s

The US President Donald Trump likes turmoil and he threw the Greenland cat among the pigeons, said Martin Sorrell, Chairman, S4Capital, a digital advertising and marketing services company.

In a wide-ranging conversation with Moneycontrol at the World Economic Forum in Davos, Sorrell highlighted how the geopolitical issues have made it tough for businesses globally.

Edited excerpts

The world seems out of control?

Sorrell: If not out of control, certainly turbulent. That’s what President Trump likes. He likes turmoil. He’s certainly thrown the Greenland cat amongst the pigeons, the EU pigeons, and they’re all panicking at the minute.

Do you think a solution could emerge out of the meetings that happen here in Davos, considering President Trump is expected, Emmanuel Macron will be here?

It’s going to be a monologue, not a dialogue. This is going to be a very American-dominated Davos. The US delegation is huge. They’ve taken over the church here—the USA House—which I think is the first time they’ve done that.

We’ve got the record number of conflicts in the world at the moment. It is a turbulent time. And how you run a business, a global business, at times like this is quite taxing. I think it actually makes people obviously less certain. There’s a tremendous amount of uncertainty about it, and that makes people much more cautious.

Agencies—advertising agents—are not doing well, and that’s something to do with what’s going on in the tech world. The tech companies are spending on capex, so spending $550 billion this year on AI, expanding AI capacity—Amazon being the biggest at $135 billion, Google I think $75 or $85 billion, and Meta the same. So they are spending huge amounts of money on capex instead of OpEx. But having said that, corporate profitability is strong, and companies are doing well. GDP in America is forecast to increase either by 2.6, 2.8%. The average is around 2.5. But the world is probably going to grow a little bit under 3%. China—5%—came in with 5% for last year. This year similar. India—stellar—6%. Modi on fire.

So, having said that—having said with all the uncertainty—US-China relationships not in a great state, Russia-Ukraine, Iran and the Middle East—despite all that, inflation not down at 2% but trending towards that, interest rates on a downward path, maybe going to go lower depending on who—so we’ll see. We’ll see. But it’s a difficult world. I think in that world, companies have got to think very carefully where they expand—that’s one thing. And they’ve got to improve their efficiency by adopting AI at greater scale.

Can India be a pocket of stability in the increasing instability of the world?

I don’t know about stability, but can be a pocket of growth. So as you look around the world, India would be right up there. You know, as the fifth-largest economy in the world—over $5 billion—so even bigger than NVIDIA, or bigger than Alphabet. But Alphabet and NVIDIA are catching up; they’re countries in their own right. No, I wouldn’t say a beacon of stability, but I would say a beacon of growth.

So I think India provides a tremendous alternative. The other thing is Indian entrepreneurs—they’ve got a big presence here this year. They’re superb, and they’re growing their position around the world. So whether it’s Ambani or Mahindra or—Mittal—it’s extraordinary. And they’ve done an extraordinary job not just in an Indian context, but now increasingly abroad.

What do you make of Prime Minister Modi’s leadership, the way he’s dealt with Trump, the US-India trade deal still not a done deal?

I think he’s done a super job. I think he understands brands. He’d be a great—he’d be a great proponent for our industry. So I think he’s done a great job. I think there is, you know, some concern about the positions he’s taking amongst some people. I disagree. I think he’s taking the right position. Playing both ends off against the middle is probably the right strategy.

Stepping away from geopolitics to the world of advertising. We are seeing a lot of consolidation—the Omnicom–IPG merger, WBD?

This is out of desperation. This is because Omnicom was flat and IPG was going down the tubes.

No, I think that’s like—that’s like Paramount and WBD getting together. It’s not like Netflix and WBD. But it’s a contraction of capacity, so it’s what I would call a defensive merger. I think the one good thing it does for Omnicom is it cements its position in the US, which is the strongest, biggest market in the world, and it’s growing strongly. So they will capitalize on that. But it’s going to take them two years to sort it out. They announced it last year; it took a year to go through regulation. There’s a lot of turmoil. They reduced their headcount from 127,500 to a projected 104,000. So it’s a bit of mayhem there. But this is their first budget year, and then they’ll need another year to tighten it up. But they’ll have a more efficient combination. But it’s not about top-line growth. It’s about cost management and reduction of capacity. And it’s really concentrated in the $300 billion—the market in ’24.

The ad market was about a trillion last year; this year it will be about $1.1 trillion; this year would be about $1.2 trillion. About $700 billion in ’24 was digital. $300 billion was traditional. Traditional was going backwards—five to 15%, depending on whether you had live sport or not. If you didn’t have live sport, you were down by 15. That’s continued into ’25 and will continue into ’26. And what Omnicom and IPG are about is that declining $300 billion. So it’s like Paramount getting together with WBD—you’ve got two studios, you make one. So you had two agencies, you make one. And I think it’s highly defensive. It doesn’t do much on the AI front for Omnicom. It doesn’t do much on the data front. They make a noise about it, but I don’t think it does.

I was out on the West Coast the last couple of weeks, and there is a feeling that it doesn’t do much other than, you know, create a bigger entity. They have more leverage on that $300 billion. When they go to negotiate with a Disney or a Fox or an NBC or a CBS or whatever it is on media rates, they’ll get a bit more traction. But in the digital space, I’m not sure it does much for them.

I also wanted to understand from you, in terms of the impact of the creator economy or influencers. What does that do to traditional advertising as we know it?

Well, it drives more into the digital space. It makes that $700 billion I was referring to even more important. That’s growing at 10, 15, 20%. But the numbers are huge. I mean, Google must be up close now to $300 billion. So if the market’s $1.2 trillion, right, Google’s a quarter of the whole. And digital is probably $900 billion out of that $1.2, and Google is getting up to $300, so it’s a third. And then Meta was $150 billion—it’s probably $175–200 billion. And Amazon was $60 billion—it’s probably about $65–70 billion now. So those three platforms—add Alibaba, Tencent, and TikTok. TikTok outside China, or ByteDance outside China, is $40 billion—must be trending towards $50 billion now. That’s where the game is being played increasingly. And for CMOs—you know, I get criticized for saying this, but I’ll say it again—I think it’s the world that’s got simpler. It’s a little bit behind your influencer question. It’s not fragmenting; it’s getting more consolidated. And the six big companies are the six that I mentioned—the three Western, three Eastern. Throw in Nvidia, Apple, Microsoft, Musk. They’re all spending about $550 billion this year on AI capacity, data, energy expansion. So they’re going to get stronger. They’re not going to get weaker; they’re going to get stronger. So influencers are a part of that digital economy, a growing part. You know, whether they’re using YouTube or TikTok or whatever—Instagram or whatever, Reels—they’re a part of that ecosystem that I’m talking about.

My last question is on AI. If you look at the progression of video editing tools, image editing tools, it’s really gotten better and better in the last six months.

Google has Nano Banana Pro and Veo, and people are able to generate some of these creatives in-house.

What does that do to advertising? Do you still need to engage an agency? Will more of it inhouse?

It means the balance of power is shifting. And I do think, there’s a lot of discussion about this. There are three things clients have got to do. They’ve got to be much more agile, for all the reasons we’ve been discussing in this interview around the political stuff as well as the technological stuff. They have to take back control of a lot of the things they’re doing. And the third thing is they have to have first-party data. When you put those three things together, what I think it says is clients are going to have to start thinking about whether they do more in-house.

We have three models. We have the classic outsourced-to-us model, the embedded model where we put people into clients but we still pay for them, and then the third is the in-house model. I wouldn’t say there’s a clear trend towards in-housing, but for example, on media planning, I think it is quite clear. You know, one of our clients said to me—the CMO said, “We know more about the automotive business than anybody else. We should have media planning in-house.” And he in-housed it.

And I think that in a world where you have to be more agile, where you have to take control of your destiny more, and where you have to develop first- and integrate first-party data, in-housing does make a little bit more sense. So I think whether it’s embedded or in-housing—so bringing together what you have into a more effective form—is, I think, really, really important. And I think that’s what we’re starting to see. Agencies can play a part in that. You know, we are very involved in in-housing a number of clients—not just in media planning and buying, but in creative too, in building creative studios.

The other thing that’s really interesting is if you look at Google and Meta, they both have the beginnings of an end-to-end model. Advantage Plus inside Meta and Performance Max inside Google are media planning and buying models—online models—for small and medium-sized enterprises. There is no reason why that can’t be expanded to the companies. And you take Nano Banana or Veo 3 and you put it together—you have an end-to-end “I create, I produce, I distribute, I plan and buy”—an integrated end-to-end campaign. And I think that’s becoming more important now. Even Google, which is, as I say, let’s say it’s around $300 billion out of the $1.2 trillion—so a quarter of the total market, or a third of digital—you know, there’s 75% or two-thirds—that ain’t inside Google, at least not yet. And so you’re not going to rely on Google alone. So you’ll want to validate and intermediate person to advise on what is the right distribution.

So I think agencies still have a vitally important role. It’s just going to be different, and it has to be much more technologically based—so knowing the technology, not talking about it, but knowing how to do it is really important.