Sir Martin Sorrell Softens His Outlook

This morning Sir Martin Sorrell, CEO of WPP Group, one of the largest advertising, public relations and market research companies in the world, joined me in studio to break down where he believes the economy is headed and why 2009 will be a difficult year for many media companies.

Hours before Sir Martin arrived, WPP reported very solid numbers. Revenue was up 20% from the year earlier, operating margins were flat and the company announced another increase to its two dividends, collectively raising the combined dividend by 15%. Not bad in this economy. He did say that 2009 would be slightly more difficult than he originally anticipated expecting advertising spending will fall by 4% versus 2% growth in 2008. His colleagues/competitors at Omnicom and Publicis have already predicted declines of 2-3%.

As always Sir Martin was refreshingly honest about his take on our current economy and what the new administration in the U.S. is signaling about government intervention. He is always bold, always charismatic and in this case slightly more optimistic than his media counterparts.

Note Sir Martin did say the following to me on Oct. 14:

"By the middle of next year, the financial markets will recover and I think we'll see just as vicious an upturn as we've seen a downturn. I think the return of confidence will be quite marked and I'm not one of those who believe we're in for a long recession."

Today he was more subdued saying he sees only "relative improvement" in the second half of 2009. Also noting the "unprecedented current financial crisis has triggered a vicious recession across the globe." Sir Martin noted that his company is very much like an investment advisor offering investment management expertise to corporations who need to get their message out in a bifurcated media market.

Take a look.