New Delhi: WPP Group Plc is one of the world’s largest communications services companies, with £7.4 billion (nearly Rs58,900 crore today) in revenue in 2008. Companies in the group include JWT, Burson-Marsteller and Ogilvy and Mather Worldwide. Sir Martin Sorrell, founder and chief executive officer (CEO) of the group, spoke to Mint on the economic climate, the newspaper business and the disruptive impact of new media. Edited excerpts:
Is the economic climate getting better?
Well, it depends on what you mean by better. I think clients feel better. Chief marketing officers feel better, CEOs feel better. But this is not translating into people signing cheques. Also, I am puzzled by people thinking that things are improving because sequential GDP (gross domestic product) numbers are getting better. For instance, France and Germany showed GDP growth quarter- on-quarter. The key issue should be how these match up to last year, not last quarter.
But even relatively speaking, are we better off now than we were in November and December of 2008?
Yes. We were looking into the abyss then. But 2010 is still too early to talk about turnarounds, budgets and forecasts.
New media: WPP Group chief Sir Martin Sorrell says that with the contours of the media changing, people will have to charge for digital content and that there will be a lot of consolidation in the industry. Ramesh Pathania/Mint
In fact, somebody in the UK asked me recently what is the one thing that has surprised me most in the last 12 months. I thought about it for a second and said “quantitative easing”. Which is really just a posh phrase for “printing money”. Every central banker has been just printing money. The real big issue is not how we get through things in the short term, but how we deal with these massive deficits later.
What are the three things that worry you the most about the future? And three things that give you the most hope?
I’ll list the last three first. It’s WPP’s mantra: new markets, new media and consumer insight—all of which will be accelerated by this current crisis. What worries me is what is going to happen after the short-term crisis. Next year should be good for advertising. You have the Vancouver Winter Olympics, FIFA World Cup, Asian Games, Shanghai Expo and last, but not least, the mid-term elections. But what will happen after that?
Coming to new media, do you think the demand for business newspapers is dead in the US and Europe?
I don’t think dead is the right term. But this has been on the cards for a long time. I see it my own reading habits. I read newspapers less and depend more on so-called electronic media. I do use my BlackBerry, the Kindle, I had a look at the new Sony e-reader. I think there still will be newspapers. But the way you define a newspaper will change. Is (a newspaper on) Kindle a newspaper or not?
This change will take longer in faster growing countries such as India where newspapers are still revered. Eventually, two things will happen: First, people will have to charge for digital content. Second, as a result of all this, there will be a lot of consolidation.
The big problem that a lot of media owners have in India is that there is no clarity on digital advertising. How much money is there to be made when it is now so minuscule?
I wouldn’t call it minuscule any more. It is around 12-13% of worldwide advertising budgets. In the old days, if you went to a market, you’d see one-third of advertising budgets for print, one-third for TV and one-third for everything else. Now, it will probably get to around 20-25% in new media, 20-25% in TV, 20-25% in print and then (the rest in) everything else.
How is WPP’s growth in India?
Second quarter was tough for us in India. I think there was a realization that even India could be affected by global trends. Up until the end of the first quarter, it didn’t (it wasn’t affected). In the second, it did (was affected).
Locally, there are concerns over the monsoons and, less so, on inflation.
So, if you were to look at your business geography, India still looks attractive?
Very attractive. The Indian economy is growing at over 6%. India is attractive to us because of growth, increasingly because of new media, and thirdly, consumer research.
Going back to digital, a big challenge for people is that digital advertising is not about being creative, but about the delivery and the technology.
We’ve always proselytized that technology is important. So, a software engineer is as important as someone in creative. The medium has become, in a sense, more important than the message. Which is something that so-called creative people are increasingly sensitive about.
Is Google still a ‘frenemy’? (Sir Martin had come up with the term to describe Google—part friend, part enemy.)
It is friendlier. I think now the “fren” part is more important than the “nemy”.
I think Google is now more focused, especially on huge opportunities such as mobile search. They have become more potent than they were before. But still, it is remarkable what they have achieved in 10 years.
You spoke about the Kindle. How soon do you think before we see an advertising model for the Kindle?
Very soon. I think James Murdoch was absolutely right over the weekend when he spoke about the BBC (editor’s note: on 28 August, in a speech, Murdoch lashed out at BBC. Among other things, he said that it was easy for BBC to create new verticals and businesses because it was not focused on cost or profit). Not to take anything away from the BBC, but if you or I had a billion pounds in taxpayers’ money, we could start a strong digital channel.
As far as digital delivery is concerned, models must be based on subscription.