Scale of PM Narendra Modi’s election success has added more certainty: WPP’s CEO Martin Sorrell

ET caught up with the world’s largest marketing communication group WPP ’s CEO Martin Sorrell for a candid conversation on India post elections 2014 and the shape of the advertising business. When we last spoke, you mentioned many people in the C-suite were cautious and not optimistic about India. Has that changed? The previous government was slowing down. India’s image as a result was not as strong as it had been. As always, the election has cleared that out and the scale of Modi ’s success has added more certainty. It’s dangerous to co-relate the two but just like a strong brand means strong total shareholder return, a strong (country) brand means strong foreign direct investment like you see in China.In his speech on Independence Day, the Prime Minister clearly made the points people wanted to hear. There’s the same euphoria around the Indian election as there was during the Obama election and reelection. Of course in America, it hasn’t quite turned out as people expected. Here, expectations have been raised to a higher level. Now it’s a question of delivering. Have you specifically noticed a trend towards companies investing less in India? You know FDI statistics better than I do. If there has been a slowdown, and I think there has, devaluation has been a big problem for domestic companies, because they import commodities and have been hit with a big increase in cost. One of the things they cut back on is marketing. On the other hand with devaluation, if you take a positive view about the economic prospects of the country, it presents a good opportunity to increase your investment. Both P&G and Unilever have spoken about rationalising their portfolio. How does this affect WPP and its companies? Our revenues increase every year. Like-for-like revenues for the first five months increased by about 3.8 per cent and our margins pre currency are improving in accordance with our budgets and targets. In 28 years, our revenues have gone down thrice most recently 2009. Probably our revenues this year will be a record despite currency issues. In India we have gone to $500 million from $400 million in the last year and a lot of that has come from acquisition but the like to like growth has been up by 6 per cent to 7 per cent. What is left in India that’s worth your time and money in terms of acquisitions? We have done 13 transactions in 10 years and 7 in the last 5. There are (further targets) but the trouble is scale. The best acquisition we could make is to grow organically. We are not going to pay insane pricing. Probably three transactions have taken place in this market that have changed people’s expectations, irrationally. For Publicis, that India numbers are down by 11 per cent in quarter one or quarter two on a like to like basis indicates that something has fundamentally gone wrong. How is your working partnership with Madison on Mediacom — would you like that to change in WPP’s favour? I’d would love to do something but Sam is impossible. (Laughs) Impossibly good. There’s been a lot of churn at senior management levels among ad agencies in India. Some say networks have an unrealistic view of how much India can deliver. What do you make of this assessment? If people fail they would say that. You presumably spoke to the failures. I think the expectations are very realistic. We’ve done well across sectors. What were your first thoughts on the Publicis Omnicom merger not coming through. Surprise or vindication? It certainly wasn’t a surprise. We always imagined POG would die either after or before the deal was done. We said it wasn’t going to happen from day one. It didn’t make sense: it was strategically flawed, structurally clunky, the clients couldn’t understand what the benefit was and nor could the people. Congrats on being the most creative network yet again at Cannes. For the 4th year in a row! We were wondering if POG would hold together just so they could trip you up. They tried but they failed (Laughs). Maybe we should now declare victory and say we are not going to enter. That will scare Terry Savage. What do you make of Interpublic saying what matters is not absolute number of wins but wins as a percentage of entries? If Interpublic thinks they will do better (on percentages) fine. The devil quotes scriptures to its own purpose.

Scale of PM Narendra Modi’s election success has added more certainty: WPP’s CEO Martin Sorrell

There’s the same euphoria around the Indian election as there was during the Obama election and re-election, says Sorrell.

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