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Bullish On India
Sir Martin Sorrell on why India will play a key role in pushing WPP’s global numbers
Photo Credit : Mark Seliger
WPP is gearing up for its global board meeting to take place in Delhi in October. While some WPP officials indicate that the global Board has met in India once several years ago, this is the first time the Board would be meeting after WPP took the top slot among advertising and marketing services holding companies. Sir Martin Sorrell, CEO, WPP, is looking forward to the Board meeting, which, he says, is to celebrate WPP’s success in India, “but not be complacent,” he adds.
Sorrell asserts that despite the global and external headwinds such as GST and demonetisation, WPP’s India operations continues to be very strong. “It has been affected but India continues to be among the strongest markets that we see worldwide,” he says. While Sorrell has always been bullish on India, going to the extent of saying that if all WPP operations were like that of India, he could retire, the statement holds significance especially now as WPP navigates a rough year.
The holding company cut its full-year net sales outlook to 1 per cent from 2 per cent. The stock declined more than 12 per cent soon after the news. WPP had reported first-half net sales down 0.5 per cent, which was below a consensus of 0.7 per cent growth. Among other reasons for the slowdown, WPP has said that markets such as the US weakened and others such as Brazil, Russia and China recorded “bumpy” growth. This essentially makes India the only performing market in BRIC entity. One of the reasons also is the global stress on FMCG companies that cut their budgets due to muted volume growth. “All countries are affected due to that. When FMCG companies cut budget, they tend to indiscriminate, and are not very market specific. This gives the local companies an advantage because local companies are not subject to the same pressure. In India, we are seeing both price and volume-led growth,” Sorrell explains.
However, despite the slowdown, the group reiterated its target for a 0.3 point improvement in its operating margin. One big contributor to that are the cost control measures that the company undertook immediately.
Simplifying The Value Proposition
Earlier in the year, several WPP companies had begun what appeared to be consolidation within some of their operations. In its media investment arm, GroupM, Maxus and MEC merged to form Wavemaker. In its digital agencies, Possible Worldwide was folded into Wunderman and VML absorbed Rock-fish. Also [email protected] was merged into Mind-share. In February, WPP merged several of its agency brands to form WPP Health and Wellness.
On the concluding day of dmexco 2017, the holding company announced that five of WPP’s brand consultancies and design agencies will come together to create a single brand agency, which is yet to be named.
Sorrell says the underlying theme across all the moves is to seek simplification. “All our clients want to work with our best people. We have to ensure that we have a structure that is simplified and makes it easier for them to do so,” he said, adding that there may be more announcements in the year.
For now, Sorrell is preparing his team for what he sees as two rough years, where countries such as India will play a significant role in achieving the targets that the holding company has set for itself.