Last week Sir Martin Sorrell forecast revenue growth of 10 per cent in The WPP Group’s marketing services businesses this year and a two to three per cent growth in advertising revenue. How significant is this and what does it mean for the rest of the design industry?
‘Historically, I think, WPP has set a 15 per cent growth rate for its businesses. But then this is not surprising, as people have been suggesting for some months that we might see a levelling off of work, generally. This is probably an ambitious target for Sorrell I would think, but not an unrealistic one, because WPP Group is not likely to set targets it cannot meet. In order to achieve this rate of growth I would imagine WPP will have to continue its acquisition programme, as well. I think that this is quite a positive indicator on the whole.’
Amanda Merron, Partner, Willott Kingston Smith
‘With a US slowdown in evidence, advertising budgets will be one of the first things that major corporations cut in order to reduce costs. Combined with the death of the dotcoms this will mean a big slow down in ad revenue growth. Sorrell has wisely invested very deeply in what many networks call Diversified Agency Services, which will help to protect the WPP Group against the cyclical fluctuations of advertising revenues. Client expenditure on non-advertising marketing initiatives (design, corporate identity, PR, below-the-line and so on) holds up better or even increases proportionally during a slowdown. This will mean a rising profile for the non-ad businesses in the group. [But] WPP’s design groups are still relatively immature businesses compared to their PR sister companies. The Big Four design shops still haven’t quite figured out what they are about – design, branding, corporate identity, Internet development, corporate communications, expression, environments and so on.’
Piers Schmidt, Chief executive, The Fourth Room
‘In recent years Zenith has been the most reliable source for a fairly secure business forecast. For 2001 they’ve forecast growth of 5-10 per cent. For this reason I think that Sorrell’s estimation is quite realistic. But I think that the growth rates for advertising will be higher. For branding and design my forecast would be at least 10 per cent, because branding is a value factor that companies are starting to recognise and invest in.’
Peter M SchÃ¶ning, design and branding division chairman, Cordiant Communications Group