WPP Chief Executive Martin Sorrell is a frequent traveller to India. "Business gets me here," he says. His $13.1-billion marketing communications company is well-entrenched in the Indian subcontinent. In this free-wheeling conversation with Viveat Susan Pinto, Sorrell, who first took control of WPP in 1985, lays down the roadmap for his group besides highlighting the role of acquisitions in the post-recession era. Excerpts:
You had a metaphor last year — LUV — for the global recession. What is your take now?
I think it is pretty much the same. The shape of recession has varied in different regions. It has been L-shaped in Western Europe, U-shaped in the US and V-shaped in the BRIC and next-eleven nations. The world is moving at different speeds and different regions are emerging out of the recession in different ways. I think LUV is a good way to define it, though it wasn't a term I coined.
You have said that five events in 2010 will add to world advertising this year. What is WPP doing to capitalise on this?
Out of the five, one is already over - the Winter Olympics - which was held in Vancouver recently. But there are four more - the FIFA World Cup in South Africa, the Asian Games in Guangzhou, China, the US mid-term elections and the World Expo in Shanghai. We are organising conferences for our clients in these regions to talk about sponsorship opportunities available. These are high-profile events and our agencies are hard at work convincing clients to invest around these properties. We are already doing a lot of FIFA World Cup campaigns for our clients. So yes, work is on in full swing.
How do you propose to strengthen your business in the Asian, African, Latin American and Middle Eastern regions - areas you've identified as your present and future?
It will be largely organic. The possibility of inorganic growth is there, but it is a bit limited in my view. Mind you, we haven't closed our eyes to inorganic growth altogether. We have set aside 100 million pounds per year for acquisitions alone. But the valuations have to be right. Outside of the US, valuations are far better. It has consistently been so even before the recession. In the US, that is not the case. Valuations are too steep.
Digital and consumer insight are two other areas you have identified as growth drivers for the company. Aren't acquisition opportunities not available here?
Yes, there are. There are a lot of small companies especially in the digital space that are revenue-driven than profit-driven. But you have to bear in mind that a lot of things have to fall in place for an acquisition - the price, the fit etc. We just did an investment last week in the e-commerce area. We are doing a joint venture right now in the technology area. So yes, acquisitions are happening. We have limited ourselves right now to acquisitions in the digital and consumer insight verticals.
Are you satisfied with the way your digital and consumer insight businesses have been shaping up in India?
Consumer insight is a stonger business here than digital is. The latter can do better in my view. We are working on strengthening ourselves in the vertical. Both India and China, for instance, are large in terms of their mobile-phone subscriber markets. Given the size, marketers realise it is important to tap consumers using this medium. For marketing services companies, the challenge is to be able to deliver that appropriately. Which is why I say our business is not only about strategic thinking, creative execution, distribution, but also about the application of technology. I don't mean we have to build giant server farms, but yes, we have to be ahead of the curve to help advertisers get close to their consumers using the medium that is relevant in that region.
Government ad spends across the globe is growing. How is WPP taking advantage of this?
We are trying hard here. For instance, we recently won the Central Office of Information's (COI) media business in the UK. The COI, which negotiates on behalf of government departments, is the largest advertiser in the UK. M4C, which is part of GroupM, has been given the task of buying media across platforms for COI. So that is one. There is a lot of work that allied agencies within the group are doing such as Landor, Fitch and Brand Union on government-related projects. Country branding is one area that we are pursuing quite seriously. So yes, work is happening there.