The weakening in the ad market is due to digital disruption, activist investors and the low cost of capital money, WPP CEO Sir Martin Sorrell told CNBC.
WPP’s latest earnings report on Wednesday showed a larger than estimated decline in consumer product company advertising spending. The stock declined more than 10 percent on the news.
But while the the current outlook is bleak, digital disruption provides opportunities for growth, Sorrell added.
“It’s the digital disruption in consumer consumption of media, the digital disruption you see in distribution, and the digital disruption you see in production through 3-D printing, and digital forms of production, autonomous cars, electrical cars, whatever it is disrupting legacy models,” Sorrell said on CNBC’s “Squawk on the Street.”
“It’s all of the above. That for us is a bigger opportunity.”
About 41 percent of WPP’s $20 billion revenue comes from digital sources, signaling the company has made the transition to today’s digital world, Sorrell said. Still there are opportunities to expand, he added.
Google partnering with Wal-Mart to offer voice-enabled shopping —which will directly compete against Amazon — was an example of how companies can adapt to changing purchasing behavior, he noted. Sorrell said earlier in July WPP would be investing heavily in digital services, particularly with Google and Facebook.
Source: Tech CNBC
WPP's Martin Sorrell explains the three reasons the ad market is struggling