Businesses must increase their investments in marketing and advertising in order to drive growth in an increasingly uncertain global economy, WPP chief executive Sir Martin Sorrell has said.
Speaking at the IAB Engage conference in London this morning, Sorrell warned that businesses are becoming increasingly timid in their investment plans as a result of rising geo-political and macro-economic challenges. He referenced recent conflicts in the Ukraine, Hong Kong, Iraq and Syria, as well as growing uncertainty in the eurozone, as reasons for this timidity.
Delays are impacting business
“Companies are sitting on $4.2 trillion of net cash,” he said. “The Pavlovian reaction to current circumstances is to delay, but that’s bad for business and for our industry.”
Sorrell argued that in addition to looking at fast growing international markets such as the BRIC nations, brands can fight for market share in slower growth European markets by targeting their marketing investments. “I think we are the solution to a lot of the pressures that are building up.”
The impact of Chinese brands
Turning to China, he claimed that western technology brands are under increasing threat from large Chinese brands like ecommerce company Alibaba and smartphone maker Xiaomi. This week Xiaomi denied claims from Apple that it has stolen iPhone technology for its own handsets.
Sorrell suggested that such disputes are indicative of a wider power struggle between western and Chinese brands. “Watch out, the Chinese are coming and it’s not just the traditional businesses that we’re used to,” he said. “Alibaba is a $200 billion market cap company – it’s bigger than Facebook and half the size of Google.”