He emphasised that optimism is necessary to survive in the advertising business. But WPP's clients haven't shared that mindset. Instead, executives are focused on cutting costs rather than revenue growth in the face of severe macroeconomic challenges.
“Oil price reductions, the Iranian nuclear 'armistice' and the international currency wars have not been helpful black or grey swans,” argues Sorrell, using the terms for wholly and somewhat unpredictable events.
The crisis in Ukraine and subsequent sanctions on Russia, tensions in the Middle East and North Africa, and the risks of a Grexit or Brexit - Greece or Britain leaving the European Union - also made his shortlist of concerns. And fears about China - fanned by the recent currency devaluation and stock market decline - and Brazil continue to abound.
Nonetheless, WPP's bosses remain "unabashed bulls" of both countries, and spy growth opportunities in Indonesia, Nigeria, Colombia and other developing nations. They also suggest that lower oil prices, quantitative easing in Europe and Japan and a "somewhat patchy" recovery in the US could shore up confidence.
A bank of swans
Sir Sorrell picked out three "grey swans". He wondered whether the Federal Reserve will continue to raise interest rates or falter, warning hikes could have a "dramatic impact" on bond and equity markets based on recent "gyrations" in the market.
He pointed to the "somewhat surprising" win for the Conservatives in the General Election, which has led to an "uncertainty-stimulating" Brexit referendum.
Finally, he highlighted the "free fall" in the oil price, which has ostensibly failed to boost consumer spending, perhaps due to flashbacks of 2008 and the onset of the financial crisis. It has also meant oil-producing states and sovereign wealth funds have been forced to "pull in their investment horns”, stirring up concerns about energy bank loans and the liquidity of banks.
Headaches for bosses
He went on to question the impact of these global threats on the mindsets of chief executives. Faced with disrupters such as Uber and Airbnb, "cost-focused models like 3G or JAB" and activists such as Bill Ackman stressing short-term performance, they certainly have their hands full. Given that the average CEO tenure is six to seven years, he adds, "no wonder conservatism rules".
He did mention a few bright spots for the advertising industry in 2016: the Rio Olympics, Euro 2016 football competition and the US Presidential Election.
