As I’ve said several times previously, it’s often difficult to really understand what’s happening in the world of economics. Are we heading back into recession? The pessimists would say we’ve not yet come out. Is the UK economy really growing? Has inflation peaked? How will events in the Eurozone affect the UK economy?
So many questions, yet where are the answers? Looking beyond the media hype, there are only a few people I really look to. One is David Smith – Economics Editor of the Sunday Times – who invariably talks great sense in a balanced, comprehensive way (and is also regularly proved to be right!). Another is Sir Martin Sorrell – CEO of WPP, the world’s largest advertising group. I always make a point of listening to his quarterly updates. In particular because they represent a broad picture which incorporates above-the-line and below-the-line marketing – subjects which are very close to my professional heart.
In an interview during this morning’s Today programme, Martin Sorrell described some interesting scenarios. Firstly, WPP have continued to perform strongly in this year’s 2nd quarter , with profits up one third across the UK and US businesses. He spoke about the uncertainty at the macro level of the global economy. Yet at the micro level, and focusing on his own business, he said the first 6 months this year looked pretty good. His clients were doing quite well, and most were still ahead of forecast in Q2. Most interestingly, he explained that companies were investing in their brand, to maintain sales and their market share.
Since returning from holiday, I’ve had discussions with several of my clients, who describe similar scenarios. Yes – it’s tough and competitive out there. But – business activity levels remain positive and prospects look encouraging. Back in 2009, the picture from many design and marketing agencies was that their survival was possible through developing existing clients, maintaining a focus on new business, trimming unnecessary costs, and falling back on their reserves to get them through the credit crunch. The situation now demonstrates a level of confidence that has been gained through the ability to weather the recession, coupled with a steely determination not just to maintain sales but to grow revenues and profit.
Who knows what will happen over the course of the next couple of years, given that the macro, global economic picture is so volatile and uncertain. What I do find encouraging however is the evidence that in certain sectors, companies at the micro level are moving forward, not simply hanging on but as Martin Sorrell says, willing to invest in their brand.
