By Rina Chandran
© Reuters Limited
Advertising firm WPP Group is hunting for acquisitions in markets such as China and India, especially in fast-growing areas such as the Internet and mobile phones, chief executive Martin Sorrell said on Wednesday.
WPP, the world’s second-largest advertising company, aims to get one third of its revenues from emerging markets in Asia, Latin America, eastern Europe and Africa, Sorrell said on Wednesday, and expects new media to make up two-thirds of its revenue mix over the next five to 10 years.
“The two items on our global agenda are fast-growing markets and growth of new technologies,” Sorrell told reporters.
“Of the last 30 things we’ve done, 15 are in the digital space, and there are some interesting opportunities in online search in Asia, because Google hasn’t penetrated it as much here,” said Sorrell, who views Google as a “frenemy”.
WPP, whose agencies include JWT and Ogilvy & Mather, bought Internet ad firm 24/7 Real Media for $649 million in May.
It is working with a venture capital fund to scout for opportunities in China, a model that may be used in India.
WPP recently bought a small Bangalore-based design agency, and is looking for digital technology and online firms.
“We tend to be late-stage investors rather than early-stage, so the price becomes expensive, so maybe the answer is to look at VC-type investing, like we are doing in China,” he said.
WPP’s greater China market will be its third-largest after the United States and Britain next year, up from fourth now. Its revenue in China will rise this year by about $100 million through organic growth alone, Sorrell said.
“One Chinese mobile firm alone has as many subscribers as the U.S. population,” he said, referring to China Mobile, the world’s largest mobile phone operator.
WPP’s growth in India is at over 20 percent, compared to more than 30 percent in China and about 35 percent in Russia, he said.
WPP has about about 30 percent of the Indian advertising market, where its competitors include Omnicom Group and Interpublic Group.
According to Media Partners Asia, India’s advertising revenues are forecast to expand 14 percent to $3.9 billion in 2007, with 90 percent coming from television and print, which are also growing, unlike more mature markets where traditional media are stagnating.
India has under 5 percent of the Asia-Pacific advertising market compared to China’s 18 percent, Media Partners Asia said.