I am more bullish about India now than I was last year: Martin Sorrell
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New Delhi: Martin Sorrell, chief executive officer of WPP Plc, is bullish on India, where the world’s largest advertising firm is clocking rapid growth. In an interview during a visit to New Delhi, Sorrell spoke on the rise of online platforms and e-commerce, the threat of ad blocking and TAM Media Research Pvt. Ltd’s tie-up with television ratings agency Broadcast Audience Research Council. WPP’s Kantar Market Research is a 50% joint venture partner in TAM. Edited excerpts:
How do you see India now?
Pretty good actually. I mean, it’s the only country among BRICS (Brazil, Russia, India, China and South Africa) that has got its head above water. If I were to draw up a ranking, India would be No. 1 among BRICS. Even if you included Indonesia in BRIICS, you would have India as No. 1, China as 2, Brazil 3 and Russia 4. There is a tremendous degree of optimism about India. Obviously, the Prime Minister (Narendra Modi) has, as one of the clients was saying to me, positioned himself in a very short period of time as a world leader. He seems to be pretty much everywhere. We had a session with him through Rupert Murdoch and James Murdoch in New York. He has, obviously, got a very ambitious plan. He’s set the level of expectation very, very high. The question is whether he’s meeting that level of expectation.
Our business here is doing very well, pretty much across the board. We have done just under $600 million of revenue this year with 15,000 people. We’re firing on, if not all, close to all cylinders. And it has a lot to do with the new leadership. I think the big question is—as it is with every ambitious, strategic plan—whether you can meet all the KPIs (key performance indicators) that you have set. I would say that there is tremendous degree of optimism and the proof of the pudding is going to be in the eating.
It’s been 16 months (of the Modi government) and some people are already eating it and they don’t particularly like it.
I think that is a bit of media-like for you to suggest that. It is early days.
So your clients are still optimistic?
More optimistic now than they were before. What are the approval ratings like (for Modi) in the poll?
Mint’s last approval rating was around 79%, which is actually higher than around the time when Modi came in. But it has, more or less, remained the same.
Well, that’s pretty good as most approval ratings go down. So I would say that is probably indicative of what I hear, which is his approval ratings have stayed the same, that is, in a pretty strong position.
To answer your question, I feel more bullish about India relatively and more bullish about India absolutely than I did (at) this time last year. It may not be the answer you were seeking.
At $600 million, your revenue in India is still small.
It is small. In China, we have the same number of people and the revenue is $1.6 billion. China is our third largest market and has roughly the same population as India. The answer is that the revenue is smaller than it should be. But our business here and our market share here are much stronger.
What’s the norm now in the proportion of gross domestic product (GDP) that typically gets spent on advertising?
India is under-branded. I don’t know if you can say what is the norm. But I would say that India continues to be under-branded, under-advertised. And you can see it sharply when you compare it to a country like China or may be even Russia. Russia for us is about $350 million of revenue, Brazil is about $600-700 million, still substantial in relation to the population size. In relation to the population size and the potential size of the economy, India is certainly under-advertised.
Although what you are really seeing in India, which is interesting, is the growth of local brands and regional brands which are based in here. The true competitor for the multinational company (MNC) is no longer fellow MNC but the local company. So it’s the rise of what we call the Asian Power brands, most of which seem to be local companies in India, or China or beyond.
Of the $600 million, how much comes from the digital business?
I would guess it would be 10-15% against the market average worldwide of about 20%. But in India, the average is about 8%. But we are double the rating for the world. If the world is at 20%, we are at 40%. If India is averaging 8%, we are 15% or so.
Are e-commerce firms giving you more business in traditional advertising?
They are giving us business both offline and online.
But most e-commerce businesses spend more on traditional media than they do online. Why is that? What does it say about the ability of online media to really build brands?
What it says is that you can’t look at one channel in isolation. The attraction of digital in early days was it was cheaper in absolute sense and it was even sexy and if you were a CMO it might have saved you some money.
The lines are not very clear on the digital side. Google and Facebook are media companies but they are also technology companies.
I am glad you said that. I have been saying it for years. Finally somebody else is saying it. They masquerade as technology companies.
They are also measurement companies.
Well, yes, but can you taste your own cooking? Can you referee your own football match? You can’t be a player and a referee at the same time. There is inherently a conflict of interest.
What are your views on ad blocking?
Android and iOS is 90%, and 90% of that traffic is on apps which are not subject to ad blocking. So the direct answer to the question is, it is not a problem now. But could it become a problem? Yes, it could. Else you could have some regulation, raise paywalls, have better creatives or if Google could say no to have ad blockers on YouTube.
Ad blocker is not a big worry at the moment, but if it started to spread, it could be. The consumer has to decide whether or not he wants content that does not have advertising.
TAM Media Research, where WPP agency Kantar Market Research has a 50% stake, is back in the ratings business with the Broadcast Audience Research Council. Is it a victory of sorts?
It was a lot of effort, wasn’t it? I am sure, looking back, it could have been short-circuited. Wish we didn’t have to go through these shenanigans to get to this particular point. Now we are fused and we are one company. We should end up with, at least in theory, a better measurement system.
There is a lot of work to be done in measurement. Technology is improving and obviously there is increase in digital viewership. The standards for measuring offline and online are totally different things. Fusing the two businesses together is a potentially fundamental change in measurement system.