 "Govt has to take immediate steps to rectify Brand India: Martin Sorrell")
Martin Sorrell, chief executive of WPP, the world's largest marketing communications company, is never short of words. From panning the now called-off merger of Publicis-Omnicom to saying India's poor record in foreign direct investment (FDI) urban infrastructure paints its growth story in a poor light, Sorrell, 69, has never hesitated about speaking his mind. In an interview with Dev Chatterjee and Viveat Susan Pinto, he clarifies the group's stand on the widely speculated deal with Arun Nanda's Rediffusion, as well as WPP's investments and revenue targets. Edited excerpts:
There is immense speculation on WPP agency Y&R buying out Arun Nanda's stake in Rediffusion.
There is no deal. We have 27 per cent interest in Rediffusion. Dentsu has a minority stake. We continue to have discussions with Arun Nanda. Nothing has been finalised yet. At the end of the day, it is up to Nanda to decide what he wants to do; he controls the agency. Lately, he has had some health issues and has just returned from a surgery in London. It is not appropriate to talk about this with him at this stage, given his health issues. So, this is where we stand at the moment.
We should double our revenue organically in the next six-seven years. I say this based on our track record here-we grew from $400 million last year to $500 million (in revenue) this year, 25 per cent growth. We continue to lead our competitors by a tall margin. I don't see the pecking order being reversed in any way. We will make investments in e-commerce and look at more partnerships with social and digital media companies in India. GroupM did two such-with Google last year and Facebook this year. There are more in the offing.
Under the United Progressive Alliance government, Brand India took a beating. With a new government in power, do you see better days ahead?
Brand India has a lot of positives, but there are negatives, too. The new government will have to take immediate steps to rectify these. FDI into India is far lower than that into China. Here, India's poor brand image has a part to play. China will be the world's largest economy in the next few years, and its good image shows in terms of FDI flows. Poor brand image and FDI inflow have a direct correlation, in terms of tourism, fresh investment, education and technology. Besides, there is a lot to be done to improve urban infrastructure in India. China has managed its infrastructure very well. With Narendra Modi at the helm, I hope India gets its mojo back.
What about a possible bid for IPG? When the Omnicom-Publicis merger was announced last year, it was widely believed WPP would make a bid for IPG.
We quashed the rumour when it had surfaced. We are quashing it now, too. I find IPG overvalued. The odds are Dentsu will buy IPG. I don't know whether Dentsu has the firepower to acquire the whole of IPG. But it needs it the most.
Globally, which is the bigger threat to WPP today-Dentsu, Publicis or Omnicom?
In terms of market capitalisation, WPP stands at $28 billion. So, we remain in a dominant position. Nielsen has actually passed Omnicom in terms of market capitalisation; while Nielsen's is $18.5 billion, Omnicom's is $18 billion. Those of Publicis and Dentsu stand at $15.5 billion and $12 billion, respectively. While IPG's is $8 billion, Havas' is $3 billion. That is the pecking order, in terms of market capitalisation. If you ask me, all of these are competitors. Dentsu is very much a media operation, thanks to its acquisition of Aegis. This is why I say it will be more interested in IPG, as that would make it a "creative organisation". If you keep aside its Japanese operations, all they have is ad agency McGarryBowen in the US, and that is showing signs of stress. So, it needs IPG. After their merger attempts failed, Omnicom has recovered better than Publicis. But we remain the leader.
There is immense speculation on WPP agency Y&R buying out Arun Nanda's stake in Rediffusion.
There is no deal. We have 27 per cent interest in Rediffusion. Dentsu has a minority stake. We continue to have discussions with Arun Nanda. Nothing has been finalised yet. At the end of the day, it is up to Nanda to decide what he wants to do; he controls the agency. Lately, he has had some health issues and has just returned from a surgery in London. It is not appropriate to talk about this with him at this stage, given his health issues. So, this is where we stand at the moment.
More From This Section
WPP's revenue from India stands at $500 million. Where do you see the business headed?
We should double our revenue organically in the next six-seven years. I say this based on our track record here-we grew from $400 million last year to $500 million (in revenue) this year, 25 per cent growth. We continue to lead our competitors by a tall margin. I don't see the pecking order being reversed in any way. We will make investments in e-commerce and look at more partnerships with social and digital media companies in India. GroupM did two such-with Google last year and Facebook this year. There are more in the offing.
Under the United Progressive Alliance government, Brand India took a beating. With a new government in power, do you see better days ahead?
Brand India has a lot of positives, but there are negatives, too. The new government will have to take immediate steps to rectify these. FDI into India is far lower than that into China. Here, India's poor brand image has a part to play. China will be the world's largest economy in the next few years, and its good image shows in terms of FDI flows. Poor brand image and FDI inflow have a direct correlation, in terms of tourism, fresh investment, education and technology. Besides, there is a lot to be done to improve urban infrastructure in India. China has managed its infrastructure very well. With Narendra Modi at the helm, I hope India gets its mojo back.
What about a possible bid for IPG? When the Omnicom-Publicis merger was announced last year, it was widely believed WPP would make a bid for IPG.
We quashed the rumour when it had surfaced. We are quashing it now, too. I find IPG overvalued. The odds are Dentsu will buy IPG. I don't know whether Dentsu has the firepower to acquire the whole of IPG. But it needs it the most.
Globally, which is the bigger threat to WPP today-Dentsu, Publicis or Omnicom?
In terms of market capitalisation, WPP stands at $28 billion. So, we remain in a dominant position. Nielsen has actually passed Omnicom in terms of market capitalisation; while Nielsen's is $18.5 billion, Omnicom's is $18 billion. Those of Publicis and Dentsu stand at $15.5 billion and $12 billion, respectively. While IPG's is $8 billion, Havas' is $3 billion. That is the pecking order, in terms of market capitalisation. If you ask me, all of these are competitors. Dentsu is very much a media operation, thanks to its acquisition of Aegis. This is why I say it will be more interested in IPG, as that would make it a "creative organisation". If you keep aside its Japanese operations, all they have is ad agency McGarryBowen in the US, and that is showing signs of stress. So, it needs IPG. After their merger attempts failed, Omnicom has recovered better than Publicis. But we remain the leader.