Martin Sorrell: Sports Marketing the Shining Light for the Advertising Industry

Sir Martin Sorrell, founder and chief executive of the world’s second largest advertising group, has said the economy is “not heading for Armageddon” and major televised sporting events in two years’ time will significantly boost the advertising industry.

The television industry is seemingly contradicting the gloom-merchants with pay-TV subscriptions on the up and advertising becoming cheaper for brands.

Sir Martin, CEO of the London-based WPP group, pointed out that advertising on television had “become attractive again” with prices on the decrease and events such as the football World Cup and the Olympic Winter Games in 2010 providing lucrative platforms for advertisers.

“The question is whether people have the vim and vigour to buy them – a bit like equities, which are looking cheap,” he said.

BSkyB also dismissed recent negative predictions in the press by posting strong results including record HD growth and statistics showing the pay-TV broadcaster is now in 9.067 million homes in UK and Ireland.

Sky+ HD increased to 93,000 more homes, and Sky+ was added to an additional 421,000 to reach a figure of 4,135,000. Sky itself reported a revenue increase of five per cent in the last 12 months and an operating profit increase of 12 per cent.

“Looking ahead, the consumer environment will remain challenging and we are well positioned to manage the business accordingly,” said Jeremy Darroch, successor to James Murdoch as chief executive of BSkyB.

Last week Sky signed a multi-million pound five-year deal extending the rights to England rugby international rights with the RFU, quashing concerns that cuts in spending are affecting the broadcasting giants. “Our products are better than ever, we are strong financially and we have a great team of people,” Darroch added.

According to figures from the third quarter, WPP also experienced a growth increase of 7.2 per cent in western continental Europe despite a slowdown earlier in the year. Across all regions, the company’s revenue growth was three per cent meaning total revenue increased by 16.2 per cent to £1.72 billion.

Sir Martin’s comments come despite admitting that his prediction the Summer Olympics would produce a “Beijing Bounce” – a spending spillover in advertising following the 2008 Games – was off the mark after third quarter figures did not show higher revenues.

“It’s going to be really tough in the US and Western Europe but overall we would be very surprised if like-for-like revenue growth was negative in 2009.  The negativity is over-cooked.
“It is not likely that our budget will reflect the Armageddon currently predicted by the fall in stock prices,” he added. “2009 is going to be very tough and the rest of this year will be difficult but we will do whatever is legal to make sure we hit our 15.5 per cent margin target.”

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