'Marketing has been belittled' since Lehmann Brothers collapse claims WPP CEO Sir Martin Sorrell
"Marketing has been belittled" within the corporate sector since the international economic problems began in recent years according to Sir Martin Sorrell, CEO of international marketing group WPP.
Sir Martin Sorrell speaking at AKQA event
Speaking at an event organised by WPP digital agency AKQA yesterday, Sir Martin offered an overview into the economic turmoil faced by the world in recent years, summing it up in one word - "uncertainty".
He elaborated by adding that he didn't believe that there was a lack of confidence within business, stating that there was actually a paradox taking place.
"It's not that people are unconfident, they are actually quite confident. The paradox is this tremendous uncertainty. If you looked at the world on 'the Lehmann Weekend' and you looked at companies, they were in pretty dicky shape. They were over stretched, they were highly leveraged and when Lehmann hit, it was the straw the broke the camel's back."
Sorrell added his belief that high-end consumers were unaffected by the Lehmann collapse, however that had been "seared" into the consciousness of the corporate world.
"We are seeing some reverberations in companies like Burberry, but at the bottom end there has always been the price-value comparison. It's in the middle where it gets very tough. So the reason why there has been a collapse in retail in this country and elsewhere is that people have been unable to define their positioning. It's stuck in the middle and that's an uncomfortable place to be with traffic going in both directions."
Sorrell described the impact of the Lehman Brother collapse on corporate culture as "phenomenal" and said that as a result there was no appetite for risk taking.
"The reason is because of Lehmann, and the rise of procurement, but marketing has been belittled since 2008 and the balance of power between finance, procurement and marketing has shifted. I don't know whether marketing is still in the ascendency or descendency, or whether it's even, but the relative positions have changed," he continued before citing the thoughts of former JWT chairman Jeremy Bullmore: "There is a finite limit to what you can do in terms of reducing costs. There is no finite limit to what you can do on the revenue side until you hit 100 per cent market share."
Sorrell explained, having spent time with one corporate organisation earlier that day: "They are now starting to look at what they can do on the revenue side as there has been enough cost cutting and blood letting. It's very difficult because you had the Lehmann experience and the you had all of the corporate governance stuff, whether you're talking about taxation, compensation, whatever you're talking about, there is this pressure and it's indiscriminate."
WPP will release it's first quarter results for 2013 tomorrow morning (Friday 26 April).