MIAMI—Global and local integration will be key to the future success for both marketing services companies and their clients, said Sir Martin Sorrell, chief executive of WPP, in conversation with Cohn & Wolfe chief executive Donna Imperato at the Global Public Relations Summit.
Asked to describe the current economic conditions around the world, Sorrell’s assessment was “tough but manageable. Even in the fast growth markets—the BRICs, the next 11—which are about 31 percent of our business, growth is not particularly fast. Looking at 2014, Western Europe is going to come back slightly and we will see faster growth in Latin America and Asia. So I am slightly more optimistic,” depending primarily on how America deals with the debate over the debt ceiling. “Kicking the can down the road again is not going to be helpful.”
The past couple of years have been particularly difficult for the company’s public relations operations.
“There are two contradictory forces. For the past year or so our public relations companies have been the least successful part of our business.” He cites a couple of reasons: “The days of retainers have gone. It’s a discretionary business and it’s a project based business and project based business have found it difficult.”
The PR industry has also underperformed at Cannes, Imperato pointed out. But Sorrell downplayed the significance of that performance. “I think it’s a matter of technique,” Sorrell said. “The advertising agencies have been at it longer. It’s history. It will change.”
And while the recent numbers have not been strong, Sorrell says he sees tremendous long-term potential for the PR industry, although he noted that the necessary transformation is not happening fast enough.
“If I look at the importance of research the importance of social and digital, in theory PR and public affairs should be becoming more and more important. I think you undersell, you lack confidence in what you have to sell. All the CEOs we meet say they spend a third of their time on regulation, and PR and public affairs is the most important part of dealing with that.”
At the same time, public relations will work more closely with other disciplines.
“My view is that it should be fully integrated into the marketing mix. The split between financial communications, corporate communications and marketing—what troubles our clients and ourselves is the continued existence of those silos. The clients we have worked with that have been more successful are those where the CEO has a clear vision, and has shared that vision with the CMO who has the power to implement it effectively.”
WPP, he says, has a two-prong strategy for greater integration, at the global level and the local level.
“There is tendency for companies to centralize more. We have client integrators—40 leaders for 40 of our largest clients.
“But at the same time we have integrators at the country level. They have no authority over the verticals, but they are responsible for three things: that we have the best people running our business, that if we are doing acquisitions we know who the best players are, and that we can identify clients in the market that will be regional or global leaders of the future.
“So we have focus at the center on these billion dollar brands, and then we have local focus in the individual markets.”
All that integration will be good for the public relations business, Sorrell concludes. "The more integrated we become, the stronger role public relations and public affairs will play."