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International: Keeping Martin Sorrell awake at night: China and Internet

06-November-2006
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International: Keeping Martin Sorrell awake at night: China and Internet

Thoughts of China and rapidly advancing communications technologies are what keep Martin Sorrell awake at night, the WPP Group chief executive told yesterday's Media Convergence Forum at Manhattan's Le Parker Meridien hotel.

Expansion plans

The keynote speaker at the daylong event, sponsored by The Economist and WPP's G2 agency, Mr. Sorrell mused that it was "China and the internet" that most troubled him when looking at the near future and WPP's plans to expand further in Asia, Africa, the Middle East and Eastern Europe.

"The geographic bit I think you do as long as you have very good nationals working in the businesses," he said. "The technology bit is much more difficult -- figuring out what the devil is going to happen in technology. I am sure that there are four or five very bright Chinese engineers in some garage in Shanghai who are coming up the next Google." He underscored the point by noting that "there are 465,000 engineering graduates a year coming out of China as opposed to 65,000 here in the U.S."

'No longer an advertising company'

As part of a detailed view of where WWP is going and why, Mr. Sorrell said "we're no longer an advertising company. About four or five years ago, more than half our revenues -- more than half of the $11 billion -- started to come from outside [the] advertising [business]."

Over the next five years, he said, he'd like two-thirds of WPP's business to be coming from outside the traditional advertising business.

One reason he cited was the cost of network TV advertising. "It continues to rise, almost inexorably -- despite all the challenges they have -- faster than inflation," he said. "Even in the upfronts this year, I think we sensed that pricing was about 3% to 4% general price inflation. When our clients are faced with an input that is increasing in cost by more than the price inflation, what do they do? They either use less of it or they find an alternative. And that's what's happening."

Source: Adage

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