WPP Group Martin Sorrell sees “more hell than heaven” in 2009 as the global economy of the developed world remains in the doldrums.
A key '09 priority is to take “headcount” out of the U.S., U.K., France, Germany, Italy and Spain and find the correct level of staffing to service the burgeoning nations of China, India and Brazil, Sorrell told the UBS global media and communications conference in New York today.
He had expected India to surpass China’s rate of growth next year, but now he does not expect that to happen in the aftermath of the Mumbai terror attack.
Developing world growth, according to Sorrell, provides a big boost to WPP. Since those nations are “under-advertised and under-branded” they shell out marketing dollars at twice the rate of GNP expansion, he explained. In contrast, ad growth in developed nations tracks the GNP.
Sorrell said WPP had been slow in realigning its employment level this year, which crimps its profit margin.
The pressure from the recession has been considerable, he noted. Some clients did not move quickly enough to adjust to rapidly collapsing markets. “It’s not that there is a lack of visibility, many just don’t like what they saw,” Sorrell said.
The WPP chief expects Q1 and Q2 of next year to pose major challenges to marketers worldwide.
He anticipates the battered financial sector will smartly rebound in the middle of `09 “when greed overcomes fear.” The “real world” will hit the recovery trail in `10, and that growth will contrast nicely with the poor performance of `09.
Sorrell expects the Democratic Congress will devise a bailout for the Big Three automakers because it is “impossible to imagine” allowing them to just go away.
The auto sector, led by Ford, generates 10 percent of WPP revenues. That’s less than the 15 percent exposure that arch-rival Omnicom has to Detroit, he noted.
Sorrell took a shot at the media for their constant drum roll of dreary economic news, though he said the media are not to be blamed for the recession.
He also said Barack Obama ran a perfect campaign that married both the old and new media, noting that the President-elect’s 30-minute infomercial ran during the World Series and drew a huge audience.
“Thank goodness he won,” said Sorrell, “because if he didn’t what would that have said about us.”