The business sentiment by 2011's end will be a mixed bag—combining the contraction of 2009 and the slight expansion of 2010—Sir Martin Sorrell, CEO of WPP Group, the world’s largest advertising agency told CNBC Tuesday.
“There will be some caution, but people are going to have to focused on growth. Otherwise they are not going to have a good story to tell on CNBC,” said Sorrell.
WPP, which has 138,000 employees in 2,400 offices in 107 countries, reported new business and strong billings into the first seven months of the year, lead by a robust US comeback.
“We’ve witnessed a fairly dramatic turnaround in the traditional media, in the TV networks, in traditional print and magazines.”CEO, WPP GroupSir Martin Sorrell
“We’ve witnessed a fairly dramatic turnaround in the traditional media, in the TV networks, in traditional print and magazines.” said Sorrel. “Also in the US—the world’s biggest economy—[it] staged a dramatic turnaround driven by that fiscal stimulus, in post-Lehman.”
Profits for WPP are up 39 percent for the year, but the stock price is off 3 percent, due to concerns about the second half of 2010.
Sorrell said the “poison in the system at the moment” that accounts for the reluctance of business to move forward, boils down to two issues. One is the threat of contagion of the European sovereign debt and the second is the unknowns about the Obama administration’s and Congress' policies affecting business.
“There is a lot of uncertainty about what will happen with the Bush tax cuts, whether they will be reinstated in any way, whether business will have to pay more taxes, health-care costs, the attitude of the administration to business, whether business will have to make more sacrifices as other sectors of the economy have had to make sacrifice," said Sorrell.
Moving forward, Sorrell said, his goal is that WPP split its business in three major areas: one-third in the BRIC (Brazil, Russia, India and China) and other emerging economies arena, such as Vietnam and Mexico, another third in digital and it continue to develop research and digital programs to extend throughout its company worldwide.