NEW DELHI: The planned cap on TV advertising minutes per hour in India is likely to drive more spending into digital and print, Sir Martin Sorrell, the head of the WPP holding company, has warned.
Speaking to Livemint, he said the cap would lead to "significant media inflation", with clients looking instead at cheaper options such as digital and print. He added that "media analysts need to be careful about this because it may not achieve the desired results and what they think they gain on price they're going to lose on volume".
Sorrell has already stated his intention that WPP should generate 40% to 45% of its revenues from digital within five years. And he thought it had made good progress in India. "It is ahead of the market here; we are the strongest by far," he said. But while it was strong competitively, he felt this was not enough strategically.
He argued that digital media had led to an increasingly fragmented marketing environment which had resulted in intermediaries becoming more important. "Because it is more fragmented, it is more difficult to optimize," he said. "So clients become more reliant (on us)."
This view was in marked contrast to a recent ANA survey which found that brand owners were turning away from external partners and towards in-house agencies.
"I have seen no evidence to suggest that," declared Sorrell. "If anything, it has gone the other way."
He expected WPP in India to hit its budgets and to expand about 10% this year. He pointed out that advertising was a proportion of GNP, forecast to increase around 5%, but "because India is underbranded and underinvested in, it should grow faster".
Despite the current situation in India, with increased inflation, a falling rupee and the uncertainties created by next year's general election, he was optimistic. "I think medium and long term, I'm still extremely bullish," he stated.
But he acknowledged that in the short term the country appeared to be depressed. "The problem is that if people don't feel good, it reflects in their consumption behaviour," he said.
Data sourced from Livemint; additional content by Warc staff