Martin Sorrell downbeat despite record year for WPP and US election lift

Sir Martin Sorrell has warned his peers of being too optimistic about prospects for the advertising industry despite this year’s usual boost from the Olympics, Euros and US election.

“The always-on, Don-Draperish general industry optimism seems misplaced,” said Sorrell, as he reported another record set of results at WPP, the advertising giant he founded 30 years ago.

“Generally in a difficult environment we did very well last year,” he said. “We’ve also come out as the winner when it came to winning new business.”

WPP landed new accounts from Tesco, Unilever and L’Oréal among others last year. Pre-tax profits rose 7% to £1.62 billion on billings up 3.1% at £47.6 billion. The dividend for the year goes up 17% to 44.69p a share.

Donald Trump, though not spending as much as rival candidates on advertising, is proving big box office for the US Presidential debates, pulling above-usual audiences to the likes of Fox and CNN which has pushed advertising rates up, said Sorrell.

He is also confident the Rio Olympics will be popular because “it will look beautiful and take place in the best timezone”. Add in June’s Euros football tournament and the industry can expect the normal 1% boost to advertising spend over normal years, he said. However, Sorrell is not that optimistic about the underlying global picture.

“Nominal forecasts for GDP have deteriorated significantly to under 3%,” he pointed out.

“There are a lot of grey swans out there. The Greek situation will reassert itself. Brexit is a major factor already dampening investment and if the vote on June 23 is to leave the dominoes will really start falling.

“The UK continues to do well but not as well as last year as George Osborne tightens ahead of 2020 and his ascendancy.

“With little or no inflation our clients cannot put prices up and are reluctant to take risk.”