Here’s a poser for Sir Martin Sorrell of WPP (left), who’s due to announce his first half numbers later this week (and answer questions about how the PubliCom merger might affect WPP).
A few stories have been leaking out, from WPP spinners no doubt, that the figures are going to be good (but they would say that, wouldn’t they?) and, more interestingly, that ‘mature’ markets like the US and Europe (in particular the UK) are outperforming those emerging ones that we’ve all been getting so excited about for the past few years.
And, on which, WPP has built its strategy; as indeed has Publicis Groupe.
Well there’s a funny thing. We noted, in WPP’s last full-year results, that the strongest performer was good old-fashioned advertising and the UK, not sexy at all in relation to go-go areas like China, India, Indonesia and Vietnam (Vietnam?), was actually doing even better. Now it seems it’s doing much better.
Which makes the conventional growth story – that it’s all about the BRICS (Brazil, China, India, Russia) and their smaller brethren look a bit last year.
Brazil has been sagging alarmingly, despite the imminent World Cup and Olympics, while India is facing quite a severe financial crisis with the rupee dropping like to a stone as the world’s funny money heads back to the US and, maybe, Europe.
So Sorrell’s usual tale of more ‘digital’ (let’s face it, everything has a digital element these days) and a bigger share of emerging markets may not line up with the actual numbers.
Big companies like WPP have to look ten, twenty even fifty years ahead of course. And maybe China and co will, indeed, end up dwarfing the ‘old world.’
But Warren Buffet doesn’t invest in digital or emerging markets. He puts his money into US railroads and local newspapers. SMS may have to change his tune in more ways than one when he faces his shareholders.