Martin Sorrell, the WPP Group chief executive, has warned advertising
agencies to be wary of budget cuts as major clients look to screw down
their costs.
He also spoke this week of a prevailing ‘climate of fear’ in which
consumers are becoming more value and price conscious and clients are
becoming increasingly tentative about their decision-making.
Sorrell’s comments came during a management seminar, Relationships,
Relationships, Relationships, to mark the launch of the Periodical
Publishers Association’s Business Magazines Week.
Addressing the seminar in a wide-ranging speech, Sorrell spoke of a
series of threats, challenges and opportunities facing the advertising
and marketing industries.
He said: ‘We have already seen cost-cutting and a drive for cost
reduction. But we will see progressive attempts by our major clients to
reduce costs.’
Sorrell went on to claim that many clients believe that the bigger the
agency, the less creative it is. He called on large agency groups to
share resources more widely to counter that negative image.
He continued: ‘There will be increasing polarisation between about five
agency groups: WPP, Omnicom, Interpublic, Leo Burnett and Young and
Rubicam and smaller companies, like the Wieden and Kennedys and the
BBHs.’
He added that acquisitions will become more important to WPP agencies in
the future.
Sorrell also warned that management consultancies are stealing agencies’
thunder. ‘They have exhausted themselves on the supply side, and they
are now focusing on the demand/marketing side,’ he said.
