WPP Group CEO Martin Sorrell, speaking at the UBS Global Media and Communications Conference today, reiterated concerns about the advertising marketplace next year given the recession and massive fluctuations in the stock market.
“I do think that the financial markets, which always go down or go up before the real world — of which we are part — will recover … by the middle of next year,” Sorrell said. “The real world, I don’t think will change for the better until 2010. And it will be helped by the fact that comparatives are going to be against a down market.”
Such comments echoed remarks Sorrell made last month in a video interview with Adweek.
Asked by an industry analyst how automotive and retail clients in particular are budgeting their marketing dollars for next year, Sorrell said all client categories are pressured, though auto, retail and travel are under “intense pressure.” Automotive business supplies about 10 percent of WPP’s global revenue and Ford is its No. 1 client.
“Every piece of evidence we find to be produced shows that those [clients] that cut in these times suffer and the costs of getting back to where they were are greater than if they continued to invest. But easier said” than done, said Sorrell, addressing a ballroom full of Wall Street analysts at the Grand Hyatt in New York.
“You’re a voracious bunch. Nobody likes to come before you and say they messed up. And so, there’s a lot of fear about and a lot of concern. And people want to try to keep to their promises [to investors] and make their promises in any way they can — even if in the long term” it hurts their growth, he said.
In response to another question, Sorrell acknowledged that non-Detroit-based automakers might get more aggressive at marketing to try to take advantage of their more vulnerable rivals. “If there’s blood in the water, competition will go for it,” he said.
One of the big challenges facing WPP in the coming year is striking a balance between investing in markets that are growing and cutting back in those that are down, according to Sorrell. He identified the former as China, India and Brazil and the latter as the U.S, U.K., France, Germany, Italy and Spain.