China Slowdown? Ad Firms Aren't Worried: WPP CEO

Sunday, 22 Jul 2012 | 1:57 PM ET

A slowdown in the broader Chinese economy hasn’t had an impact on the advertising market, WPP GroupCEO Sir Martin Sorrell, told CNBC’s “Squawk Box” on Friday.

Sir Martin Sorrell, chief executive of British advertising agency WPP Group.
Eric Piermont | AFP | Getty Images
Sir Martin Sorrell, chief executive of British advertising agency WPP Group.

Sorrell said for the advertising industry consumption rates matter more than the headline economic numbers. “In China, we’re up 14 percent so far this year,” Sorrell said. “We’ve seen no slowdown, but we’re focused on consumption.”

He noted that China’s five-year growth plan shifts the emphasis from investment and savings toward even greater consumption.

The WPP CEO said the consumption trend is still going strong in other big emerging markets like Brazil, India and Russia.

"In all those economies, the rise in the middle class has been enormous,” Sorrell said. “We’re talking about hundreds of millions of people that have been brought into a consumption phase, and that’s having an impact on our business.”

Ad Spending During a Summer Slump
Sir Martin Sorrell, WPP CEO, provides a forecast for global ad spending during a seasonal summer slowdown.

Generally, advertising is running at about 4 percent growth so far for the year, Sorrell said. “It’s been boosted by the Olympics, the U.S. election and the European football championship,” he noted.

If world real economic growth runs at about 3 percent and if advertising stays at the same proportion of GNP, you're talking about industry growth at 4 or 5 percent, he said.

"That's not bad, it's not terrible," Sorrell said.

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