The reason for the sharp slowdown recorded by the big four global marketing companies; WPP, Omnicom, Interpublic Group (IPG) and Publicis is ‘very difficult’ to explain, WPP’s CEO Sir Martin Sorrell has admitted.
This week, the global marketing groups released financial results, with WPP revealing their third quarter results, which despite seeing revenue rise by 1.6 per cent to £2.496 billion, saw it cut its growth forecast for the second time this year.
Rival group Publicis meanwhile, also saw a slowdown during the third quarter, which CEO Maurice Levy described as ‘severe’ with growth of 2 per cent, well short of the predicted 4.1 per cent target.
US company IPG also saw its third quarter revenue drop, down by 3.2 percent to $1.67 billion.
"This year has proven to be more challenging on the revenue front than anticipated, but we continue to manage the business effectively and will deliver increased full-year profitability relative to 2011," said IPG CEO Michael Roth.
Speaking to The Drum about the slowdown, Sorrell said that while the performance of the company was ‘not too far off it is very difficult to figure out” the reason for the September performance seen by all.
“There seemed to be almost a September cliff,” added Sorrell who, in the statement revealing WPP’s figures, used the analogy of four grey swans to represent the problems in the Eurozone, the hard/soft landing in China, the unpredictability of the situation in the Middle East and the uncertainty surrounding the imminent US election, which he believes Obama will ‘squeak through’ to win a second term.
These are contributing factors that saw people get “nervous”.
“There are some signs, if you look at the early warning figures, of things getting a little bit better. There’s maybe a little bit of recovery coming, but it’s at very low levels and its too early to predict whether it can be consistent.”
He added, in terms of the US election that he believed most US companies were looking to Presidential challenger Mitt Romney, and was unsure as to whether Obama’s re-election would be positive for economic recovery.
“It depends whether Obama changes, and if Obama worries about his legacy it’s probably good. If he carries on a he did in the first four years maybe not,” Sorrell explained.
Asked about this weeks news that the UK is out of recession, Sorrell was also reluctant to become enthused by the news.
"We’re bumping along at the bottom. It’s a corrugated bottom though, a bit sore. I don’t think we’re out of it. At best you can describe it as being neutral to positive...but we shouldn’t get too excited about one quarter of one per cent growth.”