I don’t think recession is fun at all, far from it. I think they are very painful, I don’t think reducing headcount is fun. It can be described any way but that way. It is a difficult time. The prospects of the industry are strong because of different reasons -- globalisation, over capacity and shortage of human capital, internal communication, distribution importance for retailers, CSR, centralisation, rise of new types of country manager -- this is all good long-term stuff. But the short-term is very painful.
Sir Martin Sorrell joined WPP in 1986 as a Director, becoming Group Chief Executive in the same year. As is widely known, ‘WPP’ stands for ‘Wire and Plastic Products’, a UK manufacturer of wire baskets, which became the “foundation” company in which Sir Martin Sorrell invested following his search for a public entity through which to build a worldwide marketing services company. Since 1986, WPP constructed its offer originally based on below-the-line marketing services capabilities in the UK and US. Since then, WPP has grown to become one of the world’s leading advertising and marketing services groups, and the company’s success and growth is synonymous with Sorrell’s success and growth in this domain. Consequently, when one speaks about Sorrell, it is not just a career graph but a WPP growth roadmap that is lined with organic and inorganic growth of the company through acquisitions, growth through entering newer markets including India and investing in new media and of late, in areas such as consumer insights. Over the years, many global industry leaders have been quoted on saying that they look up to Sorrell for what the future growth drivers would be.
exchange4media’s Noor Fathima Warsia caught up with Sir Martin on the sidelines of the Cannes Lions International Advertising Festival 2009, and in a conversation on global issues, he reiterates the areas of focus for WPP, and speaks more on the subjects such as the imbalance in search marketing and the shift in power the world economy is witnessing. He also speaks on the much written about WPP succession plans for the Chief Exec post. Q. You have been evidently passionate about the consumer insights business --- in fact it is the third thing that you see as a future growth driver after new markets and new media. You have been happy with the TNS acquisition, and you have been quoted that there is an opportunity to double the revenues on that side of the business by acquisition given that you had Kantar too. Would you like to elaborate more on what your long terms view for this business is? Information is critically important. It is not so much about the amount of information that you get access to, there is a lot that you can even find on the web now, for free or for a marginal cost. The issue is how you use it. So using information effectively is very important. We are the fourth largest information company in the world now. You have Thomson Reuters that is the biggest, it is 8-9 billion USD; Bloomberg and Nielsen at roughly 5 billion USD and we are at 4 billion USD. We have a phenomenally important position in the information business, but we have to exploit it in effective way for our clients, and for our people.
Q. Back on recession, there have been layoffs in many companies, it is not like work has reduced... It has reduced. It is very painful. One of our competitors, Levy (Maurice Levy, Publicis Groupe) actually said recession is fun. I don’t think recession is fun at all, far from it. I think they are very painful, I don’t think reducing headcount is fun. It can be described any way but that way. It is a difficult time. The prospects of the industry are strong because of different reasons -- globalisation, over capacity and shortage of human capital, internal communication, distribution importance for retailers, CSR, centralisation, rise of new types of country manager -- this is all good long-term stuff. But the short-term is very painful.
Q. WPP in India --- any steps that you are undertaking to ensure that the growth in that market is on track to attain maximum growth for the company to benefit? The people running the businesses there are extremely good. Our challenge is to maintain and to grow our position. In advertising, we have very strong businesses there, and we want to grow it more. In media, it is the same. In public relations there is more to do, though we are very strong with a brand like Genesis. In branding identity, there is more to do; in healthcare there is more to do; and in direct and digital, there is much more to do. We have some very strong businesses like Wunderman, Quasar, OgilvyOne and RMG Connect, but we have to now capitalise on that. We have to make sure we understand what is happening with PCs, mobile and Internet including video content, which would pick up in India soon too. These really are the areas where the future growth would be coming from, so you would see more emphasis on these.
Q. In the current economic scenario, many advertisers and agencies are undertaking some extreme steps to brave the situation. Where do you think these ‘out-of-the-course’ steps would leave the global advertising industry once we are out of the recession? At least for WPP, our strategies are built around three things --- new markets, which is 27 per cent of our business and we would want it to be a third; new media, which is 25 per cent of our business, and we would want that to be a third too, and consumer insights, which is around 26-27 per cent of our business, and we would want that with probably direct and digital, that should be half of our business. Those three areas are really the focus. If I am sitting in India, and I am thinking WPP, I am in a BRIC country; I am sitting in a country where digital will become more important, we are already seeing mobile go from 250 million to 500 million people and I am sitting in a country where research is admired and respected. We have strong businesses where consumer insights are going to be important. I am sitting in a pretty good spot, and those three areas would become more important. I am biased because those are the three areas around which we have built our strategy but I do believe these would be important areas of the future.
Q. Before everyone got recession as a subject to worry on, the dangerous word was Google -- the frien-emy. Has Google worry gone on the backburner? Our clients are still worried about balance in the search market space. Unlike our competitors, unlike for example Publicis, we believe that balance in the search marketing space is important. So when Google wanted to do a deal with Yahoo, we said that did not think that was right, and then the FTC tossed it out. We believe in having a balanced relationship. So we have had a research initiative with Microsoft, with Google and Omniture. We want to build a balance work place. We have our own technology platform; we are not aligned to Doubleclick as Publicis is, we have kept an even hand on hand. We believe, unlike Publicis, IPG and Omnicom, that technology application is very important in our business. That is the way we are pushing it.
Q. So do you think some industry quarters are trying to utilise the current situation in some form to bring the balance back in search marketing? No, because Google’s position is so dominant. Microsoft is trying with Bing, Yahoo is trying to develop its own business, Tim Armstrong, who comes ironically from Google, is trying to do the same with AOL. There are some opportunities now – the initial thing with Bing is quite good. So there are some opportunities to improve things, but it is not easy.
Q. In addition to the BRIC markets, there are 11 markets more that have been discussed in context to leading future growth, and this even includes the likes of markets such as Iran and Dubai. What does this signify for the BRIC markets? Will the investments in these markets be impacted due to the emergence of newer markets? It is like saying what is better - India or China, and the answer is both. The next 11 markets do include markets like Iran, and there is some debate about that, but my view in that is that you do all. There is a shift in the economic power --- whether you look at G20 or G2, the shift in power from the West to East or to Latin America, and other part of the world that I mentioned, is so fundamental and significant. This is a 200-year swing; the last time we were here was in the early nineteenth century when India and China were 40 per cent of the world’s economy, which is where they will be again in a few years time.
Q. You have said that there has been a decline in WPP revenues this year, and it is more than what you had expected. What is the immediate pressure of that? What were some of the immediate steps the company took to arrest this drop, and now to correct it in 2010? We have been aggressive; we have had a good new business run in the media area. We have been packaged goods company in China. We have had a good new business run, and it could always be better. The answer for your question is looking after existing client relations and building them, and winning new businesses, and that is what the business is about after all.
Q. But would the clients increase investments, so that they invest in all the markets? They would. The P&G CEO recently said that the only way they could grow is by getting a billion new consumers. Where are they going to come from, and he said India and China. Arguably there is 1.5 billion in China, and 1.1 in India. You have country managers for India and China, which is lunacy. You can have country managers for Portugal or even the UK, UK is still 60 million people. There are really 27 countries in India, and probably 32 in China! Companies would definitely keep investing in these markets. That said, what we have to do is disinvest from the markets that are shrinking, and invest in those that are growing. And India is a market where is traditional media and new media are all growing. The odds are that it is going to be a bigger business in a few years time. Take the example of say the German business on the other hand. It may grow, I hope it grows but it would be tougher ride.
Q. On WPP now, there has been so much said and written about after press reports on your succession plan. We just want to get your gauge on it. This is a company you have started, and it is a model that you have put in place. When these succession plan conversations come up, what is the first feeling that comes to you? There isn’t a lot written of any substance in that. Our succession plans have been mentioned in the WPP annual report for four or five years now. So it is not new. To answer your question, well, I am not immortal. That has to happen at some point in time. It is not for me to decide. When I am Non Compos Mentis, somebody would tap me on the shoulder and say, ‘You screwed up’, and that is that. We look at this every year. We look at prospective people, including me, every year.
Q. And you don't see the G7 growing? No, they won’t. But never underestimate United States because that is a 14 trillion dollars market, the next big is 4.5 trillion dollars, which is Japan. So you must never underestimate the states but with that one exception, I would say that the G7 would have a tough time.
