Of all the big media companies vying for
dominance in the industry today, Google is the best-positioned, according to WPP CEO Sir Martin Sorrell, who spoke at the UBS media conference in New York today.
“They’re almost in a perfect place,” said Sorrell of Google, which he described as a “friendlier frenemy” now than in years past. With an offering that includes search, video, display, social and mobile, Google is a formidable media competitor, the WPP chief added.
But Sorrell stressed that WPP won’t rely solely on Google platforms to get the job done for clients, noting
that Google’s primary motivation is to drive its own profits. “We have to develop agnostic platforms” to drive maximum client efficiencies, he said.
According to Sorrell, WPP is placing about $2 billion in ads with Google in 2012, second only to News Corp. The holding company will spend about $2.5 billion this year. The dollars placed with Google are far more than any of the other big digital media companies. WPP will spend around $400 million each on Yahoo and AOL, and $300 million on Facebook.
Sorrell told UBS conference attendees that WPP “could have another record year this year,” with revenue growth of 5% and pre-tax profit in the range of 5% to 10%. “But it will be much tougher sledding” to get there,” given the economy and the effect it is having on both corporate and consumer attitudes, he said.
The CEO noted a recent Business Council survey signaled a drop in corporate confidence in the economic outlook, with 74% of the business leaders polled saying they were cutting discretionary spending.
One major client recently told him it was difficult to predict consumer behavior “month
to month.” Among clients more generally, he said: “The watchword is caution.”
In 2013, despite a lack of big events like Olympics and U.S. elections, Sorrell said WPP currently estimates that it can achieve organic revenue growth between 2% and 3%.
Sorrell also said there were two major spending imbalances that clients have to correct. One is in print, which has already taken a pounding in recent years from the Internet, adding the overall time spent by consumers with print is about 10%, while the medium’s share of spending remains about 25%. The reverse trend is true of the Internet, consumers spend about 36% of their media time there while just 22% of spending is allocated to it.
“Just in the U.S., that’s a $22 billion opportunity,” he said. “It has to change.”