LONDON (Brand Republic) 鈥 Sir Martin Sorrell, chief executive of WPP Group, has said that the world鈥檚 largest advertising and marketing services business is well placed to weather any economic downturn.
In an interview in the Wall Street Journal, Sorrell said that he plans for WPP to increase its presence in marketing services and geographically grow its presence in the Asia Pacific and Latin American regions.
Around 50% of WPP鈥檚 current revenues comes from the US, making it susceptible to a downturn in US advertising spend. The US is the effective headquarters of WPP鈥檚 three advertising networks -- Ogilvy & Mather, J Walter Thompson and Young & Rubicam.
Sorrell said, 鈥淲hat you have to do is get as much flexibility into the cost structure as possible, so we have 6% of our revenues in variable staff costs like incentives, variable compensation, consultants and freelances.鈥
鈥淚n any recession,鈥 Sorrell added, 鈥測ou鈥檝e then got some proportion of your costs that you can tailor to what鈥檚 happening in the economy.鈥
In the interview, Sorrell told the paper that the buoyant growth rates of 2000 clearly cannot continue. In 2000, US growth rates were as high as 8%. Sorrell said he expected them to fall to around 6% in 2001.
鈥淵ou鈥檝e got to look at it relatively, I鈥檝e been in the business for about 25 years and I can鈥檛 remember a year when the real rate of growth has been as high,鈥 he said.