Further evidence that the UK economy appeared to going down the tubes apeared to emerge last week as WPP CEO Sir Martin Sorrell (or his scriptwriter) frightened the horses by saying that the world according to WPP was dividing into three divisions.
The first (Premiership in football parlance) included the BRICs (Brazil, Russia, India, China) and 11 emerging markets including, would you believe, Pakistan.
Next came the US and Germany (Championship) and then the rest of Western Europe including the dear old UK, still the home of WPP’s Farm Street, Mayfair HQ although technically these days the company is Irish, registered in Jersey.
Blimey, will the last person to leave please turn off the lights?
As ever with Sir Martin’s pronouncements a large slab of best sea salt should be close to hand.
It may suit WPP very well to focus on truly emerging markets like the next 11 (which also includes Mexico, Nigeria (another basket case like Pakistan) and South Korea (fair enough) because it has bigger operations in most of these places than its rivals Omnicom, Publicis Groupe, Interpublic, Dentsu and Havas.
But the chances of them being bigger ad markets (for Western-based marcoms groups anyway) than the likes of the UK, France and Italy any time soon are fairly remote.
Actually the whole terminology about these countries is skewed. The description BRICs was invented by Goldman Sachs chief economist Jim O’Neill a few years ago and, then, it described the world’s emerging economic hot spots.
But China and India are already part of the economic establishment, thanks mostly to their large land masses and huge populations. A new survey claims that China has overtaken the US as the world’s biggest manufacturer with !9.8 per cent of world output compared to the US’ 19.4.
Among Sorrell’s next 11 the differences are so vast (Pakistan vs South Korea) that the grouping is pretty meaningless.
WPP’s real problem is that, despite its recent good figures – $901m in profit, $73m ahead of number two Omnicom – it’s still seen by investors as almost a commodity stock, going up and down with world ad expenditure.
Financial analyst Bob Willott pointed out recently that its share price has only just recovered the levels it enjoyed ten years ago.
So Sorrell needs to inject some fizz and vim into the stock and one way to do this is to boost up these funny markets which are still (largely) off the radar of his rivals.
But sometimes he claims a bit too much.