Hours after the United Kingdom voted to quit the European Union, its most prominent ad industry employee is feeling… well, in his own words:
“Very disappointed, but the electorate has spoken.”
WPP Group CEO Sir Martin Sorrell told AdExchanger in a statement that “The resulting uncertainty, which will be considerable, will obviously slow decision-making and deter activity. This is not good news, to say the least.”
Sorrell noted that of WPP’s top ten markets, four are in western continental Europe. He said the company will double down on investments in those countries.
“We must build our presence there even further,” he said. “It just underlines the importance of implementing our strategy: fast-growth markets (BRICs and Next 11), digital, data – and horizontality, which ironically means getting our people to work together, not apart!”
WPP’s stock was trading down about 3% as of 11:30am EST, while other holding company shares also fell amid a broad market sell-off. Shares at French holding companies Publicis Groupe and Havas Media had dropped by 5.4% and 2.7%, respectively. In the US, Omnicom Group’s stock fell 4.4%, and Interpublic Group’s was down 3.7%.
Speaking two days earlier in Cannes, Sorrell couched the vote in terms of an M&A deal gone wrong.
“If we do vote to leave, I shudder to think what the consequences are in the short term at least. I fundamentally believe this is like a merger or acquisition. Britain together with the EU will grow faster than alone… When two companies get together, the analysts look at the cost synergies.
I think [looking at] the EU as a cost decision rather in the same way as we look at acquisitions is fatally wrong. And the whole analytical framework is wrong. You see it time and time again whenever there’s a deal: Everyone focuses on the cost synergies. Which is right in the immediate short term. But in the long term? If you put two cost platforms together and the revenues don’t grow, or they decline, what’s the point?”
More to come on this story.
Ryan Joe contributed.
