Martin Sorrell’s optimistic assessment of recovery seems premature alongside tales of woe in the UK. But he’s no Comical Ali of advertising, says George Pitcher
I have been enjoying what Sir Martin Sorrell has had to say recently. It’s reminded me of the optimistic media performance of Mohammed Saeed al-Sahaf or Comical Ali, the erstwhile Iraqi information minister.
The gutters of the marketing services sector have been running red with the most fearful economic bombardment over the past year. You might say that advertising executives have been witnessing it in a state of “shock and awe”, to borrow the description of what the US Defence Secretary promised to deliver on Saddam Hussein’s regime.
Yet WPP Group’s chief executive has been manfully appearing in broadcast and press media to tell us that the war against the American recession is being won. Only last week, Sorrell was identifying the first signs of recovery, as WPP reported flat turnover for the first quarter, against widespread expectations of a one per cent fall in sales.
True, his comments have hardly ranked with al-Sahaf’s, in that he hasn’t so far said that his advertising salesforces are butchering the Americans like dogs and that his mercenary opponents at Omnicom and Interpublic are being scattered to the winds.
Nor is Sorrell a part of a murderous and despotic regime, whatever they say at J Walter Thompson and Young & Rubicam. But the key journalistic image of al-Sahaf saying that the Americans were being defeated, even as US tanks could be seen over his shoulder in Baghdad, came to mind as I read my weekend Financial Times.
Hard by the essentially optimistic story headlined “WPP sees first signs of recovery” was another media story: “Advertising decline at the FT”. Pearson, the FT’s owners, has just reported that its advertising revenue is down 18 per cent so far this year.
So just as Sorrell is seeing the first signs of recovery – or, at least, claims to be holding the line – the tanks of the UK advertising recession come into view and blow holes in his argument. All the more so as it’s not even a story that the FT would be anxious to run – it is, after all, firing on its own troops. Sorrell has been caught in friendly fire.
I’ve enjoyed a sprightly relationship with Sorrell since inadvertently I got him jabbed in the eye by a restaurant waiter in the late Eighties. So as not to get myself jabbed in the eye in return, rather less inadvertently, let me say quickly that Sorrell is not being unrealistically optimistic.
He is quoted as saying: “Although there are signs of stabilisation, there is no great oomph. We will have to wait until 2004â¦ for more significant recovery.” I might add that what Sorrell is identifying is the first green shoots of recovery in the US, which will take time to have a positive effect on the likes of Pearson in the UK.
But the juxtaposition of the stories was nevertheless unfortunate. It may even have amounted to Pearson sending WPP a message. And it makes one dwell on the nature of the battle we are fighting against international economic atrophy, if not terrorism.
Sorrell has actually been one of the bears of the advertising sector, rather than one of those who has tried to talk it up over recent months. He has been fond of describing a bath-shaped recession.
Please note, in the context of my earlier metaphors, that he has not described it as a Ba’ath-shaped recession, though the war in Iraq is now universally included in economic analysts’ models for recovery. The question is: at which end of the bath did the advertising market enter its recession – so at which end will it emerge?
Presumably, we entered at the steep end (when and where the taps of ad revenue were turned off). At the bottom of that steep dive was a plug-hole, down which some of the less substantial marketing services operations disappeared, particularly those that were part of the dot-com bubble-bath.
Then we bucketed along the bottom and what Sorrell now sees is the start of the curve that takes us up the gradual climb of the bathend we lean on (and where we read the newspaper). There could, of course, be a plughole at this end too, for those without the stamina for the long climb to the warm towels.
WPP is widely recorded to be in good shape for this long climb, already beating revenue predictions; its core North American market is in good shape, with sales growth for two consecutive quarters. But what if the end of the bath is not there yet? What if there isn’t an end of the bath and all the water runs out, like one of those invalid’s baths with a door that opens?
I ask this, perhaps, because I spent a good deal of time with Tony Dye, the king of the City’s asset management bears, in the Nineties. He believed, and still does, that the US economy was “borrowing growth from the future”. He famously – perhaps infamously – claimed that Federal Reserve chairman Alan Greenspan was intervening in the futures markets artificially to support American equities under President Bill Clinton.
These days, those views aren’t so unfashionable. And, if they are vindicated, there is a lot worse to come – as people stop taking on the personal debt that fuelled the economy in the Nineties – before things get better. And before Sorrell can get out of the bath.
George Pitcher is a partner at communications management consultancy Luther Pendragon