WPP’s chief executive Sir Martin Sorrell has poured cold water on STW’s ambitious plans for expansion into South-East Asia, suggesting the listed Australian company which WPP has close to a 20% stake in should refocus on the Australian market.
During a visit to Australia last week where he spoke to a packed breakfast session of 750 people put on by The Growth Faculty and backed by AdNews, Sorrell told AdNews that he was unconvinced by STW’s push into Asia.
“My view is there is enough to do in Australia,” he said. “The strategic priorities for STW are more to do, in my view, with Australia and improving and strengthening the position in Australia. And then of course the digital revolution means massive changes as well in the way consumers consume media and the way we create plan and execute. There is enough to do in the Australian market without getting on planes and running around South East Asia.”
STW chief executive Mike Connaghan and chief operating officer Chris Savage in recent weeks have said they hoped the company’s push into Asia would reach $60 million in revenues and $15-18 million in profits by Christmas Day 2015.
When asked to confirm his view that he didn’t agree with STW’s Asian expansion, Sorrell said: “I’m not as in love with the idea. If I jogged back to STW under John [Singleton] and Russell [Tate], there was more of a focus on Australia and New Zealand. There is enough to do there.”
But Sorrell’s tempered view on STW’s Asian plans appeared to contradict his address to delegates at last Friday morning’s breakfast session when he said Australian companies needed to take advantage of the booming region.
“No, it’s a question about what are the skills and strengths of the people at STW,” he said. “When you start dabbling in South East Asia and you see Dentsu paying ten times revenue for Taproot [India] and a 50% premium for Aegis, you are getting into fairly scary and risky territory. And by the way it’s not just Dentsu. It’s Publicis, Omnicom, IPG and Havas. They are all scuttling around trying to find things [in Asia]. My view is stick to what you know.”
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