'Don't underestimate the power of Google' to drive growth, says Sorrell

By Arif Durrani, campaignlive.co.uk, Friday, 28 October 2011 12:28PM

WPP chief executive Martin Sorrell has highlighted "surprising positivity of the UK" despite the sluggish economy, driven by e-commerce, and particularly Google.

Speaking to CNBC today after WPP posted comparable global revenue growth of 4.7%, and reported revenues up 9% to £2.46 billion in the quarter to September, Sorrell focused on the activity in the UK, where the group has a "third to 40% of the market".

Despite the tough conditions, the emergence of Google as a new media super power was said to be driving growth at the owner of MediaCom, MEC and JWT.

"Don’t underestimate the power of Google or online," he said. "We’re seeing very significant growth there. Our spend with Google this year worldwide on search primarily is about $1.3bn. That will be running about half the level of the major media owners that we invest with."

WPP's UK revenue had jumped 6.7% in the past three months and in his outlook for 2011, he added: "The primary driver is not TV advertising, that has actually been reasonably buoyant although some of the forecasts coming up are less so, but it’s the online internet activity [that’s driving growth] at about 20% of the market due to heavy e-commerce activity in the UK.

"We’re seeing a lot of online buying and development of e-commerce activity, particularly in retail... Google, actually, is probably the biggest media owner now in the UK in one way or another, so there’s a radical change in the distribution of the market."

Sorrell went on to note there had been a "consolidation" among UK agencies since 2008, saying "the smaller agencies are finding it much tougher post Lehman, particularly as credit is restricted, and clients are consolidating".

On the commercial prospects for other media going into 2012, Sorrell added: "Newspapers remain under pressure, except in their digital form. Magazines ok, again digital gives them an opportunity, iPad, tablet driven. Radio, outdoor sort of stable, not much growth." 

Also in the interview, WPP's chief executive confirmed plans to return its tax base from Ireland to the UK had been approved by the Board.

Praising Prime Minister David Cameron’s government for being "very responsive" to concerns over the taxation of foreign earnings, he said "I would expect [to return to UK] in 2012, early 2013".

This article was first published on campaignlive.co.uk

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