Is Sir Martin’s ‘black swans’ theory one for the birds?

Welcome to the master of PR.

WPP’s half-year results, announced on Tuesday, were, by any rational judgement, disappointing. Earnings and profits were, in the company’s own word, “ravaged” by the imagesstrong pound and boss Sir Martin Sorrell (left) proceeded to pour cold water on its prospects by wheeling various ‘swans’ – black and grey.

Black swans, in Sorrell-ese, are nasty unpredictable events, the grey version are predictable problems that may still turn out to be nastier than expected. Among the former he listed various geopolitical issues across the world including the strife in the Middle East and Russia, currently behaving like a bear with a sore head.

In the grey corner we have the Eurozone’s ongoing problems, especially as they affect France, and the possibilities of Scottish independence from the UK following the referendum on independence on September and, further along the line, ‘Brexit,’ the possibility of Britain exiting the EU after the next general election.

I may have got the odd swan in the wrong camp, but you get the point. Sorrell’s point is that these known/unknown unknowns are making clients cautious – which is the nub of it.

Despite all this WPP maintains it is growing faster than its competitors and its strategy of buying into digital in fast-growing markets (which may not be growing as fast as they were) is being vindicated – despite the poor bottom line numbers.

This is all fine and good but surely these are the problems global companies are bound to face. Their job is to get on with it by using their geographic diversity to counter problems from any one particular source.

Take the currency, the soaring GBP. There’s no guarantee that the pound will weaken against the euro or any other currency anytime soon. In fact the pound is more or less at the same level it was during the decade before the financial crash of 2008. A jolly good thing it is too, as its strength shows that foreigners are still willing to lend us the money which enables us to support a huge budget deficit (which still has to respond to chancellor George Osborne’s ministrations). So this is a story that’s unlikely to change. If UK interest rates go up the GBP will probably rise further.

As to bouts of unpleasantness across the world – they’re always likely to be with us too. Russia is, indeed, a worry but, in economic terms anyway, much more for German companies than British ones like WPP. It only accounts for three per cent or so of WPP’s business so, on the old basis of swings and roundabouts, shouldn’t be too difficult to cope with.

As for the Middle East, it’s a dangerous place. But it has been for decades now – actually for about 1300 years. The answer for any global company is quite simple. If you don’t like the look of it, don’t invest there.

So WPP’s problems, if indeed they’re caused by this invasion of swans, aren’t going to go away for a while. Aren’t going to go away at all if that happy outcome depends on a sudden and universal outbreak of sweetness and light.

But most analysts bought Sorrell’s growth story (and he may be right about underlying trends) with WPP shares rising modestly.

Which makes him a pretty wonderful PR man.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.


  1. Hello Stephen.

    I hope you won’t mind me pointing out that the Black Swan theory was conceived by Nassim Nicholas Taleb:

    Best wishes from Bristol.

  2. Oh dear, as I say on AdScam today, the Poisoned Dwarf should be more aware of his empire’s history. Dear old David used a swan metaphor many, many years ago. But, unlike his, David’s were TRUMPETER swans. Truly Ogilvy-esque in its splendor and aptness.