Sir Martin Sorrell, executive chairman of S4 Capital and former chief executive of WPP, is bullish that marketing services will enjoy a healthy rebound in the final quarter of the year, although he argues that the old adage of brands "spending their way through a recession" no longer applies.
He expects all parts of marketing services to take a significant hit in the short term, with the possible exception of socially benefical or purpose-driven programmes.
Sorrell told Campaign sister title PRWeek: "I think Q2, which starts today, will be terrible. Q3 will be slightly better, but we’ll see a sharp recovery in Q4; brands will let rip. This will be a V-shaped recession."
But Sorrell, 75, said those arguing brands should spend their way through a recession were talking "nonsense" this time. "What we will see is an acceleration of what packaged-goods firms were already doing. They will cut budgets and shift to digital. We realise that people are at home talking to each other via digital technology. They are also using home deliveries as never before.
"Yes, we saw clients briefly put big ecommerce projects on ice, but they were deemed mission critical, so they have already come back."
Sorrell is encouraged by the fact that financial markets appear to be recovering their confidence a little. But he still recognises Covid-19 as an almost unprecedented global crisis.
He added: "This is not 2008, it’s not 9/11, it’s not the 199/92 downturn. It’s not even the 1970s oil crisis – this feels like wartime."
Sorrell said brands were quite right to "really batten down the hatches" at the beginning of the second quarter. And he said that S4 was controlling hiring and expenditure.
He explained: "We are very busy. But liquidity is the key for Q2. There has been very little reduction in our content practice, which is 70% of our business.
"Longer term, we will see existing trends accelerate. Consumers are becoming more tech-proficient, media owners will accelerate their shift to digital and enterprises that were hesitant to disrupt the status quo will now forge ahead with digital disruption."
However, Sorrell sees some worrying "grey swans" on the horizon, such as China potentially suffering a collapse in demand from other affected markets such as the US and other Western countries, and even tech behemoths such as Facebook and Amazon seeing a downturn because of the crisis’ impact on small and medium-sized enterprises, from which they draw a large chunk of their revenue.
On a personal level, Sorrell said he has not travelled anywhere for a couple of weeks and is now engaged with new types of online seminars with thought-leadership institutions such as Bloomberg, The Business Council and Harvard Business School.
He added: "Actually, working from home is more efficent. It has its drawbacks and is pretty exhausting, but we save time by cutting out travelling, lunches and breakfasts."