Martin Sorrell is one the advertising world's biggest names. The $11 billion WPP group, of which he is the chief executive, owns some of the largest ad agencies in India such as JWT, Ogilvy, Bates, among others. In India for the annual review of his agencies, Sorrell took time to talk to BS reporter about his plans. Excerpts:

Are margins shrinking in the advertising business?

Margins are not shrinking. But they are attractive. There are variations across agencies, but essentially these are high growth markets. Ad executives smile more in India and China, but they scowl in Western Europe. Our global margins currently are in the range of 14.5 per cent and will touch 15 per cent next year. Over the long term, I see margins touching 19 or 20 per cent depending on which accounting principles (GAAP or IFRS) you follow. 

Isn't India still a small part of the global ad pie?

India is certainly an under-advertised and under-branded market. However, as the domestic economy is doing well, companies will increase expenditure in branding. In Russia, for instance, the GDP growth is 7 per cent, while advertising grows at 35 per cent. But in India, where the GDP is growing at 9 per cent, advertising is growing only at 20 per cent.

Will India emerge as a hotspot for advertising outsourcing?

I wouldn't underestimate the power of creative outsourcing in India. However, it's still on a freelance basis. But India is a high-value but low-cost market and it delivers faster than Western markets. But the story of Argentina becoming a creative outsourcing hub is amazing. Five years ago, the country was going through an economic crisis. As the currency was weak, it started off as an attractive destination for creative advertising outsourcing. Today, the Latin American region is used as an outsourcing hub.
 
Should clients reimburse strategy and creative fees to ad agencies that make unsuccessful bids for new business (pitch fees)?

Even in the 1980s ad agencies in Europe bemoaned the fact that advertising was the only business that offered free strategy and creative advice. The scenario is still the same. However, free pitching does not materially affect our business. 
 
The future outlook

Our Asian business is 2.5 times larger than our biggest competitor. There are two things on our global agenda. To grow fast in the West Asia, Central Europe, South America, Africa and Asia . China already has 500 million mobile subscribers - the total population of the US. India is expected to cross that number by 2010. It is also a cheaper way of access for advertising in India and China.