Marketing Expert Points to the Trend of Brand Investment over Acquisition

According to the CEO of global marketing and advertising company WPP, Sir Martin Sorrell, companies are recognising that brand investment is a better way forward to drive growth than the riskier option of chasing revenue through mergers and acquisition.

Sir Sorrell commented: "Advertising as a proportion of GDP should at least remain constant overall, although it is still at relatively depressed historical levels, particularly in mature markets, post-Lehman and advertising should grow at least at a similar rate as GDP, buoyed by incremental branding investments in the under-branded faster growing markets."

"Although both consumers and corporates seem to be increasingly cautious and risk averse, they should continue to purchase or invest in brands in both fast and slow growth markets to stimulate top line sales growth. Merger and acquisition activity may be regarded as an alternative way of doing this, particularly funded by cheap long-term debt and for tax inversion reasons, but we believe clients may ultimately regard this as a more risky way than investing in marketing and brand and hence growing market share, particularly given the variability or flexibility of marketing spend."

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