Published: 27 Oct 2010
Last Updated: 24 Aug 2011
Here's a positive sign for the corporate world: WPP boss Sir Martin Sorrell says the media behemoth has just had its best three-month period in 10 years, suggesting that companies are feeling confident enough to start splashing out on marketing again. During a speech at the World Retail Congress in Berlin, Sir Martin said that despite the recovery in the ad market still being slightly shaky, WPP saw organic revenue growth of 4% during the first nine months of the year - meaning that it's already beaten its full-year targets. But Sorrell cautioned that the industry still has tough times ahead, with the US market in particular likely to slow down...
The US has actually been a huge success for WPP this year, according to Sorrell, with a swift recovery from the recession helping to boost revenues (during WPP's last quarterly results, Sorrell enthused that he could ‘not remember a more speedy recovery or turnaround of a region’ – which put a smile on the faces of ad men across the US). Performance in the UK was also impressive – Sorrell said business from here now makes up 10% of WPP’s £8.7bn turnover. Traditional advertising (including TV) was well up, he said, as companies moved from cost-cutting to investment.
After a 2009 that was described by Sorrell as ‘brutal’, the fact that the company is now officially back to the same growth levels it hit in 2008 suggests that the recovery strategies it implemented (including cutting 8% of staff) seem to have worked.
And the WPP boss is fully behind Government spending cuts, too. Although warning that they could slow growth ‘at least in the short term’, he also thinks there’s little chance they could cause a double-dip. ‘I do think it was necessary to do,’ he said. ‘It makes life difficult, but you have to rebalance the books’. Which, coming from a man who is currently celebrating his 25th year at the top of one of the biggest media groups in the world, represents a glowing endorsement for the Treasury.
Despite the good news, though, Sorrell did also caution that there isn’t much chance of the company continuing to grow at the same rate. ‘I think we’ll need some rebalancing next year,’ he said – which essentially means that even though it’s expected to make encouraging progress in developing economies, the chances of continuing to grow at 8% in the US (one of its core markets) are pretty slim, given all the likely political uncertainty surrounding the mid-terms.
We'll know more on Friday, when WPP releases its full results. But by the looks of things, this is turning out to be a good year for WPP. And that bodes well for the economy as a whole.
The US has actually been a huge success for WPP this year, according to Sorrell, with a swift recovery from the recession helping to boost revenues (during WPP's last quarterly results, Sorrell enthused that he could ‘not remember a more speedy recovery or turnaround of a region’ – which put a smile on the faces of ad men across the US). Performance in the UK was also impressive – Sorrell said business from here now makes up 10% of WPP’s £8.7bn turnover. Traditional advertising (including TV) was well up, he said, as companies moved from cost-cutting to investment.
After a 2009 that was described by Sorrell as ‘brutal’, the fact that the company is now officially back to the same growth levels it hit in 2008 suggests that the recovery strategies it implemented (including cutting 8% of staff) seem to have worked.
And the WPP boss is fully behind Government spending cuts, too. Although warning that they could slow growth ‘at least in the short term’, he also thinks there’s little chance they could cause a double-dip. ‘I do think it was necessary to do,’ he said. ‘It makes life difficult, but you have to rebalance the books’. Which, coming from a man who is currently celebrating his 25th year at the top of one of the biggest media groups in the world, represents a glowing endorsement for the Treasury.
Despite the good news, though, Sorrell did also caution that there isn’t much chance of the company continuing to grow at the same rate. ‘I think we’ll need some rebalancing next year,’ he said – which essentially means that even though it’s expected to make encouraging progress in developing economies, the chances of continuing to grow at 8% in the US (one of its core markets) are pretty slim, given all the likely political uncertainty surrounding the mid-terms.
We'll know more on Friday, when WPP releases its full results. But by the looks of things, this is turning out to be a good year for WPP. And that bodes well for the economy as a whole.
