WPP CEO Sir Martin Sorrell “misread” the advertising collapse: It’s way worse than he thought.
Here are some more nuggets from Sir Martin’s interview with the WSJ:
- WPP buys $850 million – $900 million of Google search ads every year. Google’s more “fren” than “enemy” these days, now that they’re focusing on search again.
- TV, newspaper, and magazine advertising will never be the same again. “We describe the recession as L-shaped, which implies that it will never go back to where it was before. The forecast for levels of increase in ad spending, both traditional and nontraditional, are pretty anemic for the next two or three years. I doubt free-to-air television or, in particular, newspapers and magazines, will ever be the same again.”
- WPP can’t fire people fast enough to keep up with the collapse of revenue. Thus, the 50% drop in profit. “The only thing that we can affect in the short term is our investment in people. We invest about $9 billion in people and $350 million a year in capital equipment. We made adjustments to our investment in people, which others could argue we should have done earlier. You can’t bring the average headcount rate down in line with revenues that are falling at the rate they are falling at the moment; it’s just too painful and demotivational. The number of people in the company was down by about 7% by the end of July, compared with Dec. 31, 2008. It continues to fall at a rate of about 1,000 a month. That will flatten out as we come through the end of the year and into next year.
And this gem: “I think being described as a micromanager is more of a compliment than an insult.”
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