Sir Martin Sorrell on the flaw in P&G’s ‘double down’ plan to get through crisis
For his Cannes Lions keynote, P&G’s brand chief Marc Pritchard urged marketers to “double down” on creativity and innovation to drive brand growth against crippling economic headwinds. A noble challenge, but it is one that S4 Capital founder and executive chairman Sir Martin Sorrell doubts the market will respond favorably to.
Sir Martin Sorrell on the flaw in P&G’s ‘double down’ plan to get through crisis
Sorrell joined The Drum’s editor Cameron Clarke at Cannes Lions for an exclusive interview on The Drum TV shortly after Pritchard had used his stage time at the event to make the call to action.
In the face of soaring interest rates, the war in Ukraine, a Covid lockdown in China and fraught political landscape, the outlook from economists is bleak.
For most advertisers, cutting spend is the quickest way to balance the books in times of crisis. But Pritchard, who is the gatekeeper of a $8.2bn (£6bn) annual advertising war chest, said now was the time for CMOs to convince their CEOs and finance chiefs that continued investment in marketing is vital to growth.
“It may be more important than ever to double down on our core job, our collective priority and responsibility, and the superpower that no other industry has – creativity for growth,” he urged.
Sorrell agreed the future looks uncertain, saying: “Cut to the quick, the rest of the year – and next two years – will be challenging.” But for brands to follow P&G’s example of investing in brand to navigate such choppy waters, the markets will need to have “patience” – and the S4 boss seemed doubtful of that happening.
“Marc [Pritchard], David Taylor and John Moeller have done a great job of making it [P&G] more innovative and brand focused,” said Sorrell.
”They changed the model and, in relation to other FMCG businesses, it has done extremely well. Marc has been extremely focused on innovation. But you have to have patience to do that. It’s not done in a quarter. And the downside risks at the moment are considerable. Because with the drumbeat of recession and the drumbeat of negativity – which Marc is trying to counter with those comments – the CFO, when faced with quarterly reporting, margins and analysts looking very closely, is going to question spending.
”So two things happen: you first have to find the [territories] where there’s growth and, second, you have to accelerate digital transformation and efficiency – two things that are very hard to execute. It makes sense what [Pritchard] said, but does the market have the patience for this? Look at the volatility in the market and what has happened to market valuations in the past six or nine months!”
Reports suggest that current pressures have seen the value of global stocks tumble. They are now more than 20% off their record high and have hit their lowest level since November 2020.
What this potentially means for client-servicing giants like S4 Capital, WPP, Publicis, Omnicom and Accenture is still an unknown. Sorrell said he’s been given no indications by marketers that they plan to curb budgets – yet.
“We’re trying to listen to what clients are saying, but they don’t like to give agencies bad news. It’s very rare that a client will say they’re going to cut or limit spend until the very last minute. So it’s very difficult to figure it out.
“The mood is quite realistic. Clients are very focused. One CMO told me he’s more concerned with awareness and brand than tactical, measurement and low funnel. Generally, brands are very focused on performance, measurement, media mix modelling, first-party data and bringing the signals together in a meaningful way. They’re being more tactical.
“And our position has always been lower funnel. So it’s not necessarily a disadvantage.”