• by Steve McClellan  @mp_mcclellan, December 7, 2015

It seems like most agency prognosticators believe that advertising expenditures will rise annually at a modest clip of 3% or so for the foreseeable future. Maybe a little higher in the election and Olympics years, but not by much.

Speaking at the UBS Media Conference Monday, WPP CEO Martin Sorrell did not disagree that tepid-to-modest expenditure growth was “the new normal.”

It’s a “normal” that the industry has experienced since recovering from the last recession, which Sorrell refers to as the “post-Lehman period.” 

“The corporate psyche has changed since 2008,” Sorrell told UBS attendees. Back then, he said, the near collapse of the world economy forged an “end of the world” mentality that has led to an “excessively cautious” outlook ever since within the business community.

As a result, Sorrell said, WPP sees a future where 3% annual net sales growth or thereabouts will be the norm for the holding company, with slightly higher revenues and perhaps three-tenths of a percentage point-margin improvement.

That said, clients will continue to have a need for the services that marketing and communications companies like WPP and its competitors provide, Sorrell said. Clients are “confused” by the increasingly complex media landscape and questions about how to balance investments across channels -- particularly emerging ones like programmatic.

Complicating matters is the lack of adequate standards, for both online and offline. “Ratings may be down because the ratings system is busted, “he said. His hope is that Rentrak and comScore, which are merging, will build “a better mousetrap.”

Client budgets for next year appear to be similar to 2015’s, he said.

As to Publicis Groupe’s major reorganization last week, Sorrell said it’s not dissimilar from what WPP has been doing for years. WPP calls it “horizontality," where the focus is getting the entire company to work together to adequately service client needs. But it’s easier said than done, he noted. “You’re dealing with tender flowers [read: egos]” he said. “It has to be done over a period of time.” Thus he said to expect some “volatility” within the Publicis ranks as the new order is put into place.