UBS Media Conference News

Sorrell Balances Realism, Opportunity in '09 Projections

Makes Sure to Note Potential Growth Areas -- and WPP's Strengths -- in Face of Downturn

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NEW YORK (AdAge.com) -- WPP Group Chief Executive Martin Sorrell today offered his predictions for the ad climate, painting a not-so-rosy picture for next year, but taking care to note his advertising-agency holding company is well-positioned in these tumultuous economic times.

Martin Sorrell
Martin Sorrell Credit: Tom Stockill
The Tescos and Walmarts of the world will continue to increase market share in 2009 as consumers "trade down," said Mr. Sorrell, speaking at UBS' 36th Annual Global Media and Communications Conference in Manhattan hosted by investment bank UBS.

He expects more marketers next year will eye account consolidations akin to Johnson & Johnson's recent consolidation of its pharmaceutical business with WPP and Interpublic Group of Cos. For holding companies, such pitches are likely to look attractive, because the payoff can be big. Mr. Sorrell placed the value of the J&J pharma business at a whopping $100 million to $150 million in revenue.

Seeking talent
Shortage of human capital will continue to be a concern throughout the ad world, but so will achieving the correct balance of talent across geographic markets. Mr. Sorrell seemed to indicate that going forward, WPP could decrease investment -- including job cuts -- in places such as the U.S., U.K. and Spain, while boosting staff in the "BRIC" countries: Brazil, Russia, India and China.

Of the BRIC countries, China is likely to come out ahead next year, while Russia will be under "severe pressure," he said. India should also continue to be a strong market, though it remains to be seen to what extent the recent terrorist attacks in Mumbai will affect the ad sector's performance results in 2009.

If there's any good news, it's that clients have the opportunity right now to take steps to re-prioritize and adjust marketing budgets going into the next calendar year, Mr. Sorrell noted.

Mr. Sorrell used his time at the podium to market his company, which will post worldwide revenue of approximately $14.5 billion including its recent purchase of Taylor Nelson Sofres. For example, he suggested that WPP is the most buffered against the current turmoil in Detroit, because the auto sector (Ford is a major client) accounts for an estimated 10% of WPP's revenue, while rival holding companies have car revenue of close to 15%.

Digital evangelist
He also spent a fair amount of time talking about WPP's strengths in the digital space, throwing out factoids such as that the Group M unit is the No. 1 digital media buyer in the world. The media unit is also the largest agency customer of Google, Yahoo and MSN, he said. "The digital prowess inside the group is one of the unsung stories," Mr. Sorrell said.

Looking ahead, it's no surprise that WPP's strategy will continue to include acquisitions. The group just completed an estimated $2 billion deal to take over TNS, and the ever-acquisitive Mr. Sorrell noted that in the coming year, he is interested in making strategic purchases in fast-growing regions and within marketing services -- particularly in the direct and interactive spaces.

Another priority next year will be strengthening WPP's creative offerings, by recruiting high-level creative talent and, surprisingly, "placing a greater emphasis on awards."

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