The communications business is not becoming globalised but
Americanised as powerful US companies tighten their grip on it, Martin
Sorrell, the WPP chairman, warned delegates at the Incorporated Society
of British Advertisers conference last Thursday.
Fuelled by the world’s most powerful economy and highly valued in Wall
Street, US groups have been able to pursue aggressive acquisition
programmes, Sorrell said.
And he warned: ’As long as this persists, the US-based global companies
will be at a considerable advantage.’
Not even the growing importance of Latin America and the Asia Pacific
region has shifted the balance of power, a situation that is worrying
UK-headquartered groups like WPP, he claimed.
The fact that the US financial giants, Morgan Stanley and Goldman Sachs,
between them now handle more than half the world’s merger and
acquisition activity underscores the trend.
Sorrell argued that what was happening was not globalisation but the
growing domination of many countries by US companies and the
co-ordination of more global business from North America.
As a result, about two-thirds of the world’s adspend is influenced by
the US in general and, in particular, by companies run from New York,
Chicago and Detroit.
Sorrell claimed that non-US companies are also finding it much more
difficult to compete because creative people are no longer reluctant to
work for US multinational groups.
Meanwhile, Sorrell warned that the globalisation issue was throwing up
another problem for communications groups which, like their clients,
were having to undergo major structural change.
’We at WPP are not one big, amorphous company,’ he said. ’One of our
agency networks has 6,000 employees, another subsidiary has just four.
We want the benefits of size without the inflexibility and bureaucracy.’