Sir Martin Sorrell, the chief executive of advertising services group, WPP, has published his economic predictions for the forthcoming year, and said that the next economic boom will be spearheaded from China.
He also said that advertising would remain as a constant proportion of international GDPs, in contrast to earlier statements that it would proportionality increase.
Sorrell published his findings in the UK’s Telegraph newspaper.
He said his forecasts reflect higher, but recently slowing, growth rates in Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe, leading to a slightly stronger year ahead than 2013.
“The other important variable is advertising as a proportion of GDP. Years ago, we argued that advertising as a proportion of GDP should increase over time – rising in fast-growth markets (as they are generally under-branded) and stable or rising in slow-growth markets, particularly as we recovered from the post-Lehman recession in 2009 and the consequent, though (we think) ill-advised, slashing of advertising budgets,” he said.
“Now, we reluctantly just assume that advertising will remain the same proportion of GDP globally, with the under-advertised fast-growth markets balancing the slow-growth markets.
“Given that assumption for 2014, advertising and marketing services spending should rise next year by between 4pc and 4.5pc. And given our preliminary look at our budgets, which tend to be conservative, we certainly will budget like-for-like growth of more than 3pc, compared with 3pc in 2013. The Sochi Winter Olympics, the football World Cup in Brazil and US mid-term congressional elections will help, too.”
He said that China’s predicted growth rates made him ‘very bullish’ about the economic prospects in the region.
“People ask, 'what is the next big thing in our industry?’. And the trite answer seems to be mobile and data. Hard to argue with that, but I think the next really big thing, or things, will be coming from China,” he said.
“We in the West tend to think the Chinese simply copy others’ ideas (or worse), just as we used to say about the Japanese or Hong Kong Chinese or South Koreans. If it was true, I’m not sure it’s going to remain true.
“Look at Xiaomi – the highly innovative mobile firm giving Apple a run for its money. Or wait for Ali Baba or Tencent or Baidu to launch their financial transactions platforms to compete with established state banks. A lot of the technology-driven change may well come from China, particularly as others follow Hugo Barra from Android to Xiaomi and co.”
Last week Sorrell said the recent rival Publicis/Omnicom merger had disturbed the client base, but said that changing patterns of distribution would benefit WPP.