Campaign India Team
Jul 01, 2009

Bullish on India, there’s no freeze, print is OK: Sir Martin Sorrell

Positives about India, the year ahead and an L-shaped recovery

Bullish on India, there’s no freeze, print is OK: Sir Martin Sorrell

Positives about India, the year ahead and an L-shaped recovery
If I was in India I’d be bullish about things because I’m sitting with 1.1 or 1.2 billion and other people who are generally progressing in the world’s fastest growing democracy. Digital is steadily being embraced, mobile, too, with 300 million people and going to 500 million. Our research businesses in India are very strong which are quantitative disciplines, so I feel very bullish about it. If you look at the rest of the world, it’s very difficult. The fiirst half of 2009 is extremely difficult while the second half of 2009 will probably be better in comparison.
I think the beginning of 2010 will be a sort of mild recovery, an anemic recovery. That’s a guess. It will be sort of L-shaped, in the sense that it will be an italic L that flips.
One of our competitors said that he finds conditions like this fun; I don’t find it fun. I don’t think it’s a particularly encouraging environment – laying people off and making adjustments. It’s particularly difficult when you have parts of the world, like India, growing and parts of the world shrinking. You have to shrink the parts that are shrinking and grow the parts that are growing. That’s exceptionally difficult to do. I’d rather not have to grapple with this; I’d rather be back in the middle of the late nineties. But life is cyclical so you have to work your way through the cycle. But that is very difficult.
April and May were tougher than the first quarter as we all know. Hence you have to make adjustments. The good things about our business are the BRICs and next 11, new media and consumer insight and that’s where we see the growth. BRICs and next 11 are 27% out of the business so I’d call it $ 4.5 billion out of the$ 15 billion, consumer insight’s $4 billion and new media is about $4 billion. So, in the bulk of the business we’re in good areas in theory at least, but the question is execution. So, feel good about the long term and I think it’s tough in the short term. 
 
Reasons for the bullishness on India, superb Indian revenues and paying for deadly sins in the West
Around the elections we had a tough time, but the Mumbai Sensex had a very strong upturn. But there’s been a correction that’s not happened in any of the other markets.
I feel very bullish about India. We have about 8,000-9000 people there and we feel very positive about that. Our business is approaching $400 million in revenues. India’s got a superb position in advertising, media and public relations. Prema (Sagar) from Genesis is here. We’ve got a superb business in information and research and consultancy and then there is, additionally, branding and identity and healthcare communications and direct and digital. You always have your challenges, but by and large, it’s moving in the right direction. I think it’s affected by the word recession, it’s not decoupled. The stock markets have decoupled, interestingly, in the first three months of the year, but the general markets have not. So India doesn’t grow as fast, but it’s true that the markets are growing. Advertising and marketing grows at twice at the rate of GNP, so if GNP itself grows at 5%, we grow at 10%. I expect decent growth in India, if not fully this year, next year. China too, at the same rate. India and China have been the countries that have been saving and not spending. Because we’re in the West, we have to pay for our deadly sins. 
 
Thanks to the downturn, advertisers are looking harder and harder at Marcomm spends. This has led to a lot of categories cutting down on their spends in print. Do you see that as a temporary phenomenon in India?
My impression is that traditional media in India do better than traditional media in the UK or France or Germany or Spain or the  US and that is likely to continue to be the case. But whilst the Internet, PC, mobile and video will become more and more important, the traditional media will still have a relatively stronger position in India than do traditional media in the west. So if it’s true that people have been cutting down on press, which I personally haven’t seen in statistics, then my view would be that it will get better.
 
Will money shift to new media?
When you have pressure, new media looks cheaper and the absolute costs look cheaper. If you take a million dollars out of TV, you can put 150 or 250 into new media and keep the rest or do with it what you want. So I think there’s a tendency, whether that’s a right thing to do or not, only time will tell. I happen to think that it’s probably the wrong thing to do, but I’m biased. So people tend to say, “I’ve saved some money. I can get the same reach, frequency by shifting some money into online and win that way.
I think every CEO or CMO says they’re spending the same amount or more. We know that that’s not true. 
 
India specifically has been a TV obsessed market. Do you see that changing?
Well, you could say the same thing about Brazil. I think that at some point in time, it must change. If I download video onto my PC, is that TV or video? Some of these definitions lose meaning. In the classic sense that may be right. But on the other hand, when India are playing cricket, what’s the best way to watch it? 
 
All your media agencies in India seem to be doing exceptionally well. What would you attribute that to?
There are a lot of able people who’re doing a very good job. Intellectually they understand the media business well. We started off in Asia with Mindshare. We then bought MEC through Y&R and then MediaCom through Grey and then we got some help from Sam Balsara. I think it’s a very good business. I think the other parts of the business are very good. JWT does the Congress Party and Piyush does his bit.
I think media in the Indian context is very important. I think we have very good creative and research capabilities, and they all make it put together nicely. If our businesses were strong everywhere around the world as it is in India, I could retire. 
 
With a growth in your media agencies, there has been a freeze in recruitment in India…
That’s not factually true. In fact I think they’ve all managed to take on more people without us knowing! 
 
Are we going to see a lift on that freeze?
Well, there’s not what you described. India has slowed; slowed not to the extent that we’re going backwards, but it has slowed. A lot of people in India didn’t believe six months ago that it was going to slow. It was the election that had slowed it down, but it will pick up again. Prema for instance was very bullish, CNBC and UTVi, when I spoke to them today, were very bullish. But India is not dependent on exports in the same way China is. But the world is not decoupled; we’re all dependent on one another. 
 
So are you going to lift the freeze?
There is no freeze! What happens is, the people who’re running the brands tell the people in India that “you can’t do this”.  They blame WPP. What they have to do is, manage the people numbers in line with the revenues. So if you’re running Ogilvy or JWT, Mindshare or MediaCom, you have to look at it on a worldwide basis. They have to manage it in that way.
 
The last time you spoke, you said 25% of WPP’s business was in digital. Has that changed at all?
It’s the same.
 
Has it been worth your while to be at Cannes this year?
It’s been good. Two more days to go. We’ll see. Tomorrow there’s an interesting panel. Last year we had the technology panel. 
 
On Google, Publicis and his view
It’s a monopoly or should I say domination. They have a 65% share in the USA and then there’s outside the US too. Publicis said that Google should get together with Yahoo! in America and create a bigger mountain. We don’t think that’s right. From our clients’ point of view, you buy me and I buy on behalf of our  clients. We have an arrangement with Google and Microsoft on research. We want to work with all the providers, so we get more balance in the marketplace. When Google went with Yahoo! we took a very firm position in the marketplace; we said it was wrong. The FTC ultimately agreed with us, so did the advertising association, the agents, the client association. The newspaper federation agreed with us too, but they would wouldn’t they, since they were eviscerated with Google! This is a really important point. We don’t want to have a most-favoured nation arrangement with Google. We want an equal playing field for our clients. Because, I think ultimately if there is such concentration it will lead to an increase in pricing which is not good.

Source:
Campaign India

Related Articles

Just Published

20 hours ago

Deepika Padukone grooves to 'Auva Auva' for Levi's, ...

Watch the film conceptualised by Spring Marketing Capital here

21 hours ago

Sony Music appoints Sangeetha Aiyer as director of ...

Moves from NBCUniversal India where she was head of marketing

21 hours ago

New Government guidelines to hold social media and ...

It involves a three-tier regulation mechanism that requires OTT platforms and YouTube to self-classify their content into five categories based on age suitability

22 hours ago

Narendra Modi, Virat Kohli and Rahul Gandhi lead ...

Social media analytics firm Twitteet released its analytics for January 2021