WPP Group, recently relegated by Interpublic to number two in the world marketing services league [WAMN: 19-Mar-01], sees future revenue growth in the developing markets of Asia and Latin America.
Speaking to the Wall Street Journal, WPP chief executive Sir Martin Sorrell opined that these two markets would between them contribute one third of the group’s annual revenues within the next decade.
Only eighteen per cent of WPP’s $4.5 billion (E5.2bn) annual revenues during 2000 derived from the developing nations (including Africa and the Middle East), although the regions reflected the WPP’s second fastest growth after continental Europe’s 47%.
Assuming a modest one per cent revenue growth over the next decade, plus acquisitions, Sorrel calculates that these regions could generate one third of total WPP revenues – Europe and the US delivering the balance.
Responding to a question about growth prospects in Asia, Sorrell opined: “I'm not a great believer in the theory that corporate cultures can prevent companies from doing things together. However, with Japanese and Korean businesses, the cultures are so different that it would be very difficult for a foreign business to control and run a Japanese business."
Of the indirect links with Dentsu, Japan’s largest agency and a world contender, Sorrell reported three cordial meetings with top Dentsu executives in the last few months. Despite the joint DY&R venture with WPP-owned Young & Rubicam – relatively static since 1999 when the Japanese giant acquired a 20% stake in America’s Bcom3 Group – Sorrell is confident that the co-venture will not be allowed to wither on the vine.
The belief that Dentsu can't compete without first breaking into America and Europe in a big way "is a rather Western comment" he said. "Japan and Asia are a huge market, and it's not bad to have your business centered in the world's most populous region."
News source: Wall Street Journal