WPP aims to balance global with local

23 July 2009

LONDON: Striking the right balance between the global and the local will be a key requirement for WPP Group in the future, and the marketing services conglomerate is also increasingly looking to move beyond "traditional" advertising, according to its ceo, Sir Martin Sorrell.

Speaking at the American Chamber of Commerce in Singapore, Sorrell said adopting a "global focus is becoming more important, but at the same time local focus is also becoming more important."

Currently, major multinational advertisers such as Procter & Gamble and Unilever contribute around 50% of WPP's total revenues.

Equally, however, "nearly half of our business is made up of regional and national companies. I think you always need a balance between the two – there's no point being dominated by multinationals," Sorrell said.

Indeed, the holding company is now seeking to take a more nuanced approach to its operations in individual markets, although developing this model has not been without complications.

"Whilst we won't see a return to the country managers of 15, 20 or 25 years ago, we will see the development of country managers in a different way," Sorrell argued.

This has led to "tremendous matrix issues" thus far, but understanding "who the best people are in the market, who the clients of the future are and who the potential acquisitions are critically important,” he added.

On a similar note, WPP's ceo posited that like-for-like growth would be a key driver of strategy going forward, rather than expanding through acquisitions, one of the holding group's defining characteristics.

"You might find this an extraordinary statement from me, but acquisition is not the best way to grow. Organic growth is always the strongest way to grow," Sorrell stated.

In terms of the current advertising climate, Sorrell said "we feel pretty gloomy about what's going on at the moment", but the second half of 2009 will "look better" as "the comparatives get easier."

Furthermore, sentiment among advertisers seems to be improving, but while "the head and the heart might be better ... it hasn't sort of gone down to the hand which writes cheques yet."

Looking to the long-term, one of adland's most noted commentators predicted marketers will continue to increase their online expenditure to match the growing amount of time consumers are spending on the web.

"We know that consumers spend 20% of their time online and we also know that our clients only spend 12% to 13% of their budgets worldwide online," he said.

"That's a disconnect that has to be eradicated, and, in our view, it will be eradicated in the next five years or so."

In line with this trend, the world's largest holding group by revenue wants "non-traditional advertising to be at least two-thirds of our business, and we're getting there," its founder argued.

Media owners face greater challenges, as companies like Google have "provided information at zero marginal costs to consumers and at the same time has disinter-mediated industries in a major way."

"People in television, newspapers and magazines know the violence in which these changes are taking place. Magazines and newspapers are falling like flies in the US and Western Europe and will continue to do so," Sorrell predicted.

Data sourced from Marketing Interactive; additional content by WARC staff