Asian and Latin American markets are growing faster than the American market, but most U.S.-based multinationals only do about 20% of their business abroad, he told the Marketing 2020 conference sponsored by the International Advertising Association and Advertising Age International.
IMPORTANCE OF FREE TRADE
"The single most important driver for our business has been the increasing realization of free trade," he said, noting that Latin America has grown to 20% of WPP's business from about 11% five years ago.
Even though Mr. Sorrell built WPP by acquiring J. Walter Thompson Co. and Ogilvy & Mather Worldwide in the 1980s, he said financial institutions in the 1990s have great reservations about the extent and scale of acquisitions.
"There is a premium for companies who grow organically," he said. "How can you get greater growth out of the existing portfolio you have?"
Mr. Sorrell is examining his own group's structure and evaluating the holding company's role. As he was in New York, the Financial Times published an interview in which Mr. Sorrell said the holding company costs about $25 million a year to run and needs to clearly define where it can add value to its operating units and their clients.
"If after four or five years we can't do that, we'll break the company up," he was quoted as saying.
A WPP executive hastily said that while the holding company itself might cut back if it doesn't generate enough revenues to cover its headquarters costs, there is no question of selling any of the operating units.