23/08/2017 BBC Business Live


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This is Business Live from BBC News, with Rachel Horne and Ben Thompson.


Advertising a slowdown, global giant WPP misses targets


as big companies pull spending on adverts.


Live from London, that's our top story on Wednesday 23rd August.


Consumer giants are cutting their ad spend with WPP, but is it a sign


of economic weakness or just a symptom of the shift


Also in the programme, Typhoon Hato causes havoc in Hong Kong,


leading to hundreds of flights being cancelled and a stock


We have the FTSE 100, down, the WPP share prices down already tempers


and this morning. We will bring you all of those figures in a moment.


And we'll get the Inside Track on the cost of keeping fit.


We meet one man flexing his financial muscles -


and boosting his gym empire in the depths of a recession.


And with the global fitness industry now worth a staggering $83bn


a year we want to know, how much do you spend


WPP - the world's largest advertising group -


has cut its sales outlook, after a drop in demand


from consumer goods clients and weak trading in the US.


Like-for-like net sales fell 0.5% while underlying net sales in the US


fell by 2.2% in the first half of the year.


Shares in he giant have tanked this morning ,


The advertiser is seen a bellwether for an industry that's changed


While the total spent by brands globally on advertising in 2016


was up at $493 billion, where it's being spent


were effectivly flat, global digital ad sales


That number will of course keep growing,


and by 2021 it's estimated it will account for 50% of all adverts.


Well, mostly to Facebook and Google, together they control


54% of the global digital advertising market,


But are adverts on these platforms even getting to their audience?


It's been estimated that invalid traffic, that's where a bot rather


than a human views an advert, is costing advertisers a staggering


$16.5 billion a year, and that number is expected to grow.


Well, a little earlier I spoke to Sir Martin Sorrell,


the CEO of WPP who explained what his company was doing


There are a couple of points here. First there is the bots issue, that


these ads are not being watched by people but by machines and we are


ever vigilant on that. Group M, our media planning and buying company,


which buys about $75 billion of media around the world, about 25% of


worldwide media that goes direct to agencies, or goes through agencies.


They have very high standards, in terms of viewability, measurability


to try and counter that. And then there is the consumer brand safety


issue, which you are sort of referring to, which is that some


material might end up in less than satisfactory, to put it mildly,


areas or parts of the internet. And that is an area it has become even


more important, fake news and fraud also becoming important. And that is


a question. You can't be 100% certain that you can cover this,


that you can be much more stringent, in terms of the rules. Facebook, for


example, and Google have made strenuous efforts recently, under


some pressure to do so, but they have made strenuous efforts


recently, and they dominate digital advertising.


With us is Stephen Woodford, Chief Executive at the


There is a lot for us to get through in these results but first of all it


is worth living at what advertising tells us about the wider economy,


because it is one of those things we call a bellwether, when advertising


is doing well, the economy tends to do well, and vice versa. So what


does this tell us about the economy? When you look at the contribution


advertising makes to the economy it is a very important bellwether. It


has a big impact on the overall economy, as well as being a big


sector in its own right. One of the things we should think about it is


2016 was a record year for the advertising industry, particularly


in the UK. 2017, we are still forecasting some growth. Why was


2016 so good? It was surprisingly good because in effect all of the


Brexit scare stories did not serialise, the this is where it


feeds through to the bellwether, because business confidence in a


sense determines a lot of advertising decisions, so it is


businesses's expectations of what consumers will be doing. What do you


think that these figures we have seen from WPP? The markets are


surprised, the share price has fallen by over 10% this morning.


Were you expecting the sorts of figures from WPP? I think we were,


in terms of potentially less organic growth may have had in the past but


I can't really comment on the share price fall, but I do think it is


worth saying about WPP, it is the world's leading company so it is a


very good bellwether for the global advertising industry, and it is also


a reflection of the British advertising industry, how many


industries is the world's biggest company a British one? I think WPP


is something we should be very proud of here in the UK. If it is a


bellwether, does it sound the alarm that they are growing their growth


predictions, sales have fallen, problems in the US? I can't comment


on the detail of that but I think there is overall a potential


softening of demand because of the overall global economy. That being


said, if the US carries on performing strongly I would expect


advertising to rebound. Certainly in the UK at our expectations are low


growth but still some growth in line with the economy. If you look at an


organisation like WPP, traditionally made a lot of its money from TV and


big billboard ads. Clearly that has now changed and it is now digital.


You might say a integrated agency that can do online, print, big


posters and TV is commandeering the market. Where is the growth coming


from? Digital platforms in particular, and the piece before


talked about the growth of Google and Facebook. But it is worth saying


all advertising media is going digital. Even the oldest media,


posters, is not for the 5% digital, in terms of digital outdoor display


ads and so on. The industry, television and radio and press is


going digital. This year, digital revenues up by 25%, a quarter of all


of their advertising revenue. Even press is very strongly going on the


digital channels, so I think the whole industry is changing towards


more digital channels. This dominance from Facebook and Google,


when it comes to digital advertising, can you see anybody is


coming in in the future and taking any share off them? It is hard to


predict the future. The rise of other platforms, Google and Facebook


will fear most new platforms coming, whether it is Amazon or others. It


is a strong overall indicator of the health of the market is the balance


between these two things. Generally, advertising works best when you use


a multiple of channels, ideally for the five different channels. TV on


its own can be very good, digital on its own can be very good, when you


use the two together you get better results. The best advertising tends


from using brand building advertising and short-term


advertising, which is usually digital. You have an update on the


WPP share price, you saw it on the screen, it is down 149 points this


morning, more than a 10% fall in the share price in the first 38 minutes


of trade for WPP, so investors not to thrilled.


In Hong Kong, the city's stock market has been shut down


and flights have been cancelled by Typhoon Hato, which has been


Sharanjit Leyl is in our Asia business hub.


What impact is that storm having on the financial markets, they have


been shut, schools and businesses shut, what impact will that have on


the city? You pretty much said it, all of those things are shut down.


Hong Kong has come pretty much to a standstill. The typhoon really a


category eight storm, down from category ten, which means the struct


of Winscombe huge waves, uprooted trees, flooded streets, closed


businesses. No trade for the Hang Seng. We know it is the worst storm


the special administrative territory hasn't Jordan Silk -- since 2012.


More than 400 flights have been cancelled and cafe Pacific said the


storm would severely impact flights. We are told only one flight managed


to land earlier this morning. Now the schools are closed, all of the


skyscrapers in Hong Kong's iconic skyline are shrouded in darkness, as


workers stay home. Bearing in mind it had been a category ten typhoon


warning initially and this was really only the third time one had


been issued since 1997 when the former British colony was handed


over to China. Even though the territory suffers the storms on


pretty much an annual basis, this one may well be bad enough to have


an impact on businesses and the economy. Thank you very much.


Let's take a look at some of the other stories making the news.


Chinese car-maker Great Wall Motor has said it has not held


talks with Fiat Chrysler, putting a possible bid


Great Wall confirmed it had researched the US-Italian car-maker


but made no substantial progress towards a deal.


On Monday, the car-maker expressed interest in buying


Shares in the Chinese firm fell 2% in Shanghai after the announcement,


Amazon's blockbuster deal to acquire Whole Foods Market for $13.7 billion


Whole Foods shareholders are voting today on the deal,


which would propel Amazon further into the grocery business


The size of the gender pay gap in the movie industry has been


It estimates the top ten actors earned $488m last year -


three times their female counterparts - who took home $172m.


Transformers star Mark Wahlberg tops the male list at $68m, compared


with $26m for La La Land's Emma Stone.


Let's look at how the markets have been getting on. Markets in Asia


generally up just a little, following a surge they saw yesterday


running with a bit of optimism over US tax reform plans. The Hang Seng


is actually closed at the minute because of typhoon Hato, so that is


why it is flat. Wall Street, the dial up almost 8%. An even higher


rise on the Nasdaq. Much more attention will be on the central


bank meeting duties. Tomorrow. Will the Federal Reserve boss give any


plans about the bank's plans to wind in its huge bond holdings? We will


talk about that in a moment. Let's see European markets have been


doing, the FTSE is down ever so slightly. WPP share prices down more


than 11% now this morning. Future growth down from 2% to between zero


and 1%. In Europe, central bank chief, the ECB chief, Mario draggy,


he is going to speak today. Investors will be looking to see


what he says. Let's go to Wall Street and Michelle Fleury. When


Hewlett-Packard split into two companies, HP ink which has as its


printer and copier business was considered the runt of the letter.


Investors saw for growth opportunities in the enterprise side


but HP think has surprised many, in a good way. -- HP Ink. Given the


lacklustre PC and printer market, profits are likely to fall. Look out


for more news on America's housing market. Recent data shows house


prices have recovered. The latest figure is expected to show an


increase in July but investors are watching the signs of weakness. So


well concerned over a looming slowdown hurt profits at home


improvement retailer, Lowes, which shows its second-quarter results.


Joining us is James Quinn, business editor, Telegraph Media Group.


We spoke about WPP at the start of the show. Is this a shock? I think


it is one of those bellwether stocks. If you look at the global


economy, pretty stark words from Martin Sorrell earlier. I think it


is a surprise, yeah. Possibly an element of surprise. The share price


will probably end the day six or 7% down. When a company share price


drops this far, this fast, will you now see people going, let's by a


bargain? There will be some bargain buyers looking for activity. It is


August. A lot of traders will be away. A lot of problematic trades


kicks in there. Then real-life traders return. Sally is not here


today. She gets very excited about the central bank action. I will play


that role. We will hear from Mario Draghi today. What we expect from


Mario Draghi? She has started speaking while we have been on air.


He is largely talking about Monetary Policy Committee regulation. Not


talking too much about tapering. The initial reaction was quite muted. At


the same time we have strong numbers from Germany today showing how


strongly the German economy is growing. That is quite interesting


in terms of what he and Janet Yellen will talk about. I think she will


avoid talking about tapering. Her speech will focus on financial


stability. The speeches are analysed to the nth degree. On the on this


programme can we talk about someone making a speech to avoid something.


We will talk more in awhile. For now, thanks.


Still to come, the business of fitness - we hear from the man


who's bucking an economic slowdown and running one of the world's most


successful gym chains in South America.


You're with Business Live from BBC News.


Identity theft has hit new record levels, according to the Fraud


It says nearly 90,000 cases were recorded by the group


in the first half of the year, with young adults


The BBC's personal finance reporter, Kevin Peachey,


Kevin, what do the numbers tell us? They show that cases went up by 5%


in the first half of the year. That takes it to 500 cases a day.


Name-macro says it has reached epidemic levels. -- Theresa May. It


is not the old and vulnerable. It is people in their 30s and 40s. People


with a digital footprint to have been online are social media and so


their identities have been stolen. What can people do to prevent it? Is


it as simple as constantly changing your password? There is an element


of that. Some people don't realise they have been victims because the


fraudsters have taken out a loan in their name. They are getting their


details from public records and the dark web, part of the Internet that


is not available on a conventional search. So Cifas says yes, people


should be changing their passwords. They should be using... Employers


should be educating staff on how to keep on top of fraud prevention and


making sure they are changing passwords and keeping safe online.


What is really interesting is that young adults are the most likely


target. When we think about online fraud, we thought maybe it was older


people? Absolutely. The over 60s are the only age group cases are going


down it is coming up the fastest among 20-year-olds. That is clearly


because they are part of social media. They have a strong online


presence. The 30s and 40s are where the most cases are overall.


Thank you, Kevin. Go and change your password. There is an interesting


story on the Business Live page. The new Heathrow boss slamming -- the


former BA boss slamming Heathrow over its new runway. He says the


plans are not credible. Sir Rod Eddington is advising a rival scheme


proposing an alternative to the runway at Heathrow. Nonetheless, he


knows what he is talking about. This claim will have some weight. That is


on the website. Our top story - the world's biggest


advertising group, WPP, has cut its sales outlook,


following a drop in demand from consumer goods companies


and weak trading in the US. Let me show you what the markets are


doing. WPP one of the big fall is so far. Currently down almost 11%.


Investors somewhat surprised by that lowering of the growth forecast.


That is probably why the FTSE 100 has tipped into the red. The pound


weakening once again over the course of the week. That has been a


continuing trend stop And now let's get the inside track


on the fitness industry... Globally the industry


was worth $83.1bn in 2016, and it continues to grow,


specially in Europe and the USA. Latin America has seen slower


growth, but 20 million consumers there use more


than 65,000 health clubs. In Brazil, one man has


been defying all trends. Edgard Corona's Smart Fit now has


365 gyms across the continent. The BBC's Daniel Gallas metup


with him in Sao Paulo. He began by askinghim how he has


expand the business in the middle the whole idea is that -- at the


beginning is less divine. When we want uniforms, we chose fashion


designers. It is a very important factor. Everything together. The


system that you provide, the programmes that you create, help us


to be different from the market. If you are in the US, from the total


number of members, you have 70 weight percent in this business. --


seven to 8%. The people come. What makes members stay is the right


process to deliver results. What we are looking for and trying to


improve his results in a short period of time. So the great value


that you have is time. If I ask you to exercise two hours a day, you


will say, I don't have this time. But you can come here three times a


week, 30 minutes. Increase your metallic -- metabolism speed, reduce


your weight, improve your health. You will see a healthy, more


beautiful, thinner... A lot of people say that Brazil is a very


hard place to do business, that it is risky to invest here. Why do you


do it and how do you do it? For sure, maybe it's not an easy place


to do business. But in Brazil, everything that you do, regulations,


regular Tories and everything, is very, very tough. A lot of laws, a


lot of rules to improve people's lives. And most expensive. Maybe


Latin Americans understand how to work in this kind of environment.


Expanding in a downturn. Some markets are pretty resilient. We


have been asking you how much you would spend on keeping fit. Amanda


says walking and housework are free. Ed says, how much of that ?83


billion, it's actually dolorous, is made up of multiple gym memberships


going on used? Jerome says he pays ?90 per month, which is ?300 for


every swim he takes. Samantha says ?85 on running trainers, worth every


penny. Good trainer is important. Andrew says YouTube provide advice


for exercise at home. Lots of free online sessions. Jim locations are


very smart these days. Mine is next to a KFC and a McDonald's. It is a


vicious circle. James Quinn is back with us. There is a really nice


story in the Guardian. Poor and overpriced funfair rides could be


closed under new rules. There is a shining light on this, we may get


better rides? That's right. The competition authority has decided to


look at this sector, questioning whether when one funfair comes to a


town, whether another one can, the same time, whether pricing too high.


They are really expensive. If you want to go on the merry-go-round, it


is $5, $6. Yes. Some pricing is in question. The showman 's Guild of


Great Britain, the governing body of the funfairs, has said, yes, we


agreed. Maybe some of our practices are not up to scratch in the modern


era. Let's wrote in the New York Times. Apple plans for a self


driving car. It is a crowded market. It seems Apple has decided they will


put their technology to use in a self driving car. Apple's


headquarters is in silicon valley in the US. They will try this


technology in a shuttle bus that takes employees to work. That is a


risk! It is slightly different to testing and iPhone! Good to see you.


Thank you James. Good -- thank you for all your comments.


Really interesting when you talk about how much the fitness industry


is worth. 83 billion dollars a year. It is all the gear, everything.


There will be more business news throughout the day


on the BBC Live web page, and on World Business Report.


Good morning. It has been a pretty wet night across Northern Ireland


and Scotland. I am hopeful of the weather improving from any today as


the rain band clears, you can see the front which is draped across


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