Sorrell: Most of WPP’s Australian growth will be organic, not via acquisition


WPP’s growth in Australia is likely to come from within its existing businesses rather than buying new ones, Sir Martin Sorrell said today.

The CEO of the global marketing giant was on a brief visit to Sydney, his first in two years.

His comments will lower expectations that WPP might look to bolster its creative performance locally through picking up independent agencies or companies within the Enero portfolio.

He said: “I’d argue in Australia, for example, the key opportunities are organic opportunities. If I look at the Australian market, as you know well at Mumbrella, there are significant pitches, opportunities, changes in accounts of significant size, that are probably bigger than most acquisitions you could do in Australia in any segment.

“Two thirds of our growth each year has to be organic. If we grow at 5% this year that’s an Aegis, a billion dollars. I’d like all our businesses to be better – restless. It’s the wrong word to say I’m unhappy – but restless to be better all the time. By and large I’m pleased with the scope and the breadth of the organisations here.”

Sorrell added: “I think we have better than average people here (in Australia), if you give them the opportunity in markets that are growing rather than slow markets.”

Sorrell outlined WPP’s strategy as one of: “new markets, new media, consumer insight and horizontality.” By horizontality, he said he was referring to persuading all of his agencies to work more closely together.

He also talked about the importance of the web and its disintermediation of traditional business, claiming that while “people pooh pooh Google Plus, it is strong,” and unequivocally stating “Facebook is a branding medium, not an advertising medium.”

WWP’s global profits for the first half of 2012 have been steady at 5.5% growth. 

Sorrell also referred to Dentsu’s acquisition of Aegis Media, which has Harold Mitchell at the helm locally after he sold his business to Aegis. He argued that Dentsu was forced to acquire to continue growing because it had no more growth available to it in its home market of Japan.

He said: “If you’re Dentsu and you have 110% of your profit coming from Japan which has been stagnant for 20 years you have no choice. So you have to pay a 48% premium for Aegis and make Harold Mitchell even richer than he was before…we’re not in that position.”




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