The WPP Group is one of the world's largest communications services companies with 7.4 billion pounds in revenue in 2008. Companies in the group include JWT, Burson-Marsteller and Ogilvy & Mather Worldwide.
spoke to Martin Sorrell, founder and chief executive officer of the group, on the economic climate, the newspaper business and the disruptive impact of new media. Edited
Is the economic climate getting better?
Well it depends on what you mean by better. I think clients feel better. Chief marketing officers feel better, CEOs feel better, but this is not translating into people signing cheques.
Also I am puzzled by people thinking that things are improving because sequential GDP numbers getting better. For instance and France and Germany showed GDP growth quarter on quarter. The key should be how these match up to last year, not last quarter.
But even relatively speaking are we better off now than we were in November and December of 2008?
Yes. We were looking into the abyss then. But 2010 is still too early to talk about turnarounds, budgets and forecasts.
In fact somebody in the UK asked me recently what is the one think that has surprised me most in the last 12 months. I thought about it for a second and said 'quantitative easing'.
Which is really just a posh phrase for 'printing money'.
Every central banker has been just printing money. The real big issue is not how we get through things in the short term, but how we deal with these massive deficits later.
What are the three things that worry you the most about the future? And three things that give you the most hope?
I'll list the last three first. It's WPP's mantra: new markets, new media and consumer insight-all of which will be accelerated by this current crisis. What worries me is what is going to happen post the short-term crisis. Next year should be good for advertising. You have the Vancouver Winter Olympics, FIFA World Cup, Asian Games, Shanghai Expo and last but not least the mid-term elections. But will happen after that?
Coming to new media do you think the demand for business newspapers is dead in the US and Europe?
I don't think dead is the right term. But this has been on the cards for a long time. I see it my own reading habits. I read newspapers less and depend more on so-called electronic media. I do use my Blackberry, the Kindle, I had a look at the new Sony e-reader. I think there still will be newspapers. But the way you define a newspaper will change. Is (a newspaper on) Kindle a newspaper or not?
This change will take longer in faster growing countries like India where newspaper are still revered. Eventually two things are going to happen: first people will have to charge for digital content. And secondly, as a result of all this there will be a lot of consolidation.
The big problem that a lot of media owners have in India is that there is no clarity on digital advertising. How much money is there to be made when it is currently so miniscule?
I wouldn't call it miniscule anymore. It is around 12-13% of worldwide advertising budgets. In the old days if you went to a market you'd see a third of advertising budgets for print, a third for TV and a third for everything else. Now it will probably get to around 20-25% in new media, 20-25% in TV, 20-25% in print and then (the rest in) everything else.
How is WPP's growth in India?
Second quarter was tough for us in India. I think there was a realisation that even India could be affected by global trends. Up until the end of the first quarter it wasn't affected. In the second it did (was affected). Locally there are concerns over the monsoons and, less so, on inflation.
So, if you were to look at your business geography, India still looks attractive?
Very attractive. The Indian economy is growing at over 6%. India is attractive to us because of growth, increasingly because of new media, and thirdly consumer research.
Is Google still a 'frenemy'?
It is friendlier. I think now the 'fren' part is more important than the 'nemy'. I think Google is now more focused, especially on huge opportunities like mobile search. They have become more potent than they were before. But still it is remarkable what they have achieved in ten years.