Martin Sorrell, CEO, WPP has often called himself an India bull, and despite various on-going conversations and concerns around the slowdown in the Indian economy and consequently, the Indian advertising industry, Sorrell continues to be optimistic on the market. He worries, however, that India does not seem to be so sure about its future. “And that is surprising,” said Sorrell, as exchange4media catches up with him during his current India visit.
“India has begun to lack self-confidence, which I worry about. If there is any country that should have been confident about its future, I thought it would be India. I often say that if all our businesses were like India, I would retire. While our businesses continue to get better here, the general atmosphere is of uncertainty,” said Sorrell.
As is the case of most holding companies in India, WPP businesses are growing in the market. Where the India GDP is at 5 per cent, WPP has recorded a 10 per cent growth in its businesses in 2012 and Sorrell expects the same for 2013 as well. But unlike any of its competition, WPP’s revenues from India are set to soon cross the $500 million mark – a significant distance away from the next player, which in India would be IPG. WPP’s global revenues are at $17 billion.
In India, WPP’s key growth driver is organic. Growing market share and acquisitions have also contributed to achieve the current pace of growth. Sorrell informed that WPP is seeing growth across the sectors (media, creative, digital, PR and the likes) that it is present in. “Organic growth is the key and I think some of our competitors are still figuring that out. India continues to be a fast growing market for us. I have not seen the final numbers from our companies yet but the budgets are looking good. I can’t find any part of our business that is having a tough time,” elaborated Sorrell.
And he believes that not only India, but other BRIC markets per se will see a ‘soft landing’. The reason is the constant and significant rise of lower middle class. The lack of self-confidence hence may be temporary, but not required, according to him.
The “Bad” Deals
The one aspect of the Indian advertising industry that Sorrell does believe is unfortunate is the over-priced acquisition deals. “Whether it is Omnicom-Mudra or Dentsu-TapRoot, these deals are off the charts and would not work in the long term. And people take these numbers to be the norm which they aren’t – they are just economically unviable.” He informs that this is also true for Brazil and for US internet companies.
What this means for a company such as WPP is looking for other deals that still factor in its overall strategy. “If people are overpaying in Brazil and India, there is still Russia and China one can look at. And there are internet companies in various markets such as UK, France and Germany that can be explored. There is still a lot one can do but we would stay focussed on our strategy of new media and new markets in our expansion plans,” Sorrell remarked.
Sorrell also cleared the speculations around Madison, and said, “We are not in any negotiations with Madison. We have a joint company with Sam (Balsara) and that is all.”
At present, WPP has a force of 12,000 people in India. Apart from the new markets and new media focus, WPP’s India strategy also includes application of data and technology and ‘horizontality’, essentially meaning the ability for various functions to work seamlessly and harmoniously in a strategic manner allowing the company to leverage its overall might.
He said, “Our strategy is well-defined even if it may be wrong. But if imitation is an accurate form of flattery, it looks like we are doing the right things.”