Advertiser confidence hurt by China unrest, Isis and Ebola

Sir Martin Sorrell, founder and CEO of the world’s largest advertising and PR company WPP plc., said on Friday that the unrest in Hong Kong, the Ebola epidemic and the emergence of Isis are “grinding down” confidence among the world’s major advertisers.

WPP posted slower revenue growth in the third quarter of 2014. While pointing to the fragility of the Eurozone, Sir Martin added that the geopolitical risks have become much more complex.

“All that adds up to a lot of uncertainty, which makes clients cautious. These uncertainties grind people down,” he said.

He described the Eurozone’s virtually non-existent growth and ultra-low inflation as a “gray swan”, a term he coined when describing upcoming events whose outcomes are uncertain.

WPP net sales in the 3-months to September increased by 3% to £2.76 billion, against 4.1% in H1 2014.

He expects growth in the fourth quarter to be weaker.

Sir Martin expressed concern at the weaker last quarter performances of some major multinationals, such as Unilever and Procter & Gamble. The ones to succeed are those that have managed to cut costs.

WPP plc

(Source: WPP plc.)

Since the Scottish independence vote, Sir Martin said businesses in the UK are now becoming increasingly concerned about the British referendum on leaving or staying in the EU in 2017.

The head of the London-based company insists the UK is better off “inside the tent than without,” a view shared by the vast majority of British business leaders.

WPP reiterated that it will meet its full-year targets. Despite the recent slowdown, Sir Martin believes the UK remains very strong.

WPP managed to poach a large number of clients following the collapsed merger between Omnicom and Publicis, including brewer AB InBey from Publicis and telecoms giant Vodafone from Omnicom.

Sir Martins said “Their eyes were off the ball. Omincom seems to have coped better, but I think even they have had some issues. It’s left a lasting effect.”

Sir Martin, who has always enjoyed talking in metaphors, says he believes the current global economic recovery is like a gently rising square root sign. “It’s a square root sign. The dip being 2009, the rise being 2010 and then a gentle rise in 2011, 2012, 2013, 2014, and hopefully 2015. I think the odds are that we’ll have a continuation of the pattern of growth that we’ve had [over the past few years].” In other words, he sees slow global growth continuing at its present pace.

WPP shares increased in the London Stock Exchange on Friday afternoon by 0.6% to £12.16.