WPP's Sorrell: Client Budgets Are "Ludicrous"; Nobody Believes Agencies Who Say "Keep Advertising in a Recession"

WPP chief Martin Sorrell is in Davos, thinking big thoughts. Wearing a jaunty blue-and-white scarf to protect himself from the snow, he was stopped in a corridor by CNBC reporter Becky Quick (wearing the tightest sweater ever seen on TV).

In a three-minute interview, he said some moderately revealing things, including:

• That his financial and automotive clients are still investing.
• That client budgeting habits are “a little bit ludicrous.”
• And that nobody believes ad agencies when they tell their clients they must keep advertising during a recession.

The latter point is advertising’s worst-kept secret. Some renewed attention has recently been paid to the “bouncing basketball” TV spot from the ’70s which encouraged clients to maintain brand momentum during the recession so they could bounce back higher than their rivals. Sorrell’s comment suggests that neither clients nor agencies really believe it.

Here’s a digested transcript from the video, (here).

On whether companies are still advertising:

We’ve seen with clients in ‘08 that you would think logically are in sectors that are under tremendous pressure, without naming them, the spending has not gone down, the spending has increased.

On banks and auto clients:

When it’s a lot of pressure and you have new product introductions — interestingly our auto and financial clients have been investing.

On ad budgets:

… budgets in a sense are a little bit ludicrous. They appoint numbers, a fixed number, nobody talks about ranges, nobody talks about differences in circumstances. It’s a fixed-point number and over the year things change and they alter their approaches.

On whether TARP money should be spent on advertising:

It’s much worse than that in some senses. I went to an investment banking conference in New York and was somewhat amazed to hear that an institution that had taken advantage of bank holding status talking about using some of that TARP money to invest in new media. That sort of is a little bit of an illogicality.

On whether clients buy the argument that they should keep advertising in a recession to claim market share from non-advertising rivals:

For the auto companies to succeed they have to sell cars and trucks that you and I want to buy … so they have to market … it’s easy to say but when they’re faced with interviews like this every quarter when they have to go to analysts and institutions every quarter, it’s very, very tough. And when you have the opportunity to make your numbers by making some adjustments, if I can put it politely, or making some cuts, to put it impolitely, they’ll do it. You can understand it. It’s human nature to focus on the short term …