Tag Archives: CMOs

Navigating Marketing’s Turbulent Waters

26 Oct

waypointHaving choices can certainly be a good thing. But an overabundance of options carries its own set of challenges. Thom Browne, the American designer once said that: “When people have too many choices, they make bad choices.” 

While an apt description of the $560 billion global advertising industry or not, the expansion and fragmentation of the advertising sector, fueled by rapid advances in technology has complicated things for many of the industry’s stakeholders. Consider the following:

  • In addition to traditional TV, there are over 100 streaming services available in the U.S.
  • According to Internet Live Stats, there are 1.7 billion websites on the worldwide web
  • Fast Company estimates that there are over 525,000 active podcast shows
  • Author Scott Brinker identified 7,040 MarTech solutions in his 2019 Marketing Tech Landscape
  • Agency Spotter indicates that there are 120,000 ad agencies in the U.S., 500,000+ worldwide
  • Inc. Magazine has identified 700,000 consulting firms across business functions globally

As the plethora of options have grown, so has the level of angst and uncertainty among marketing practitioners and suppliers alike. For an industry that has always prided itself on its ability to adapt to change, the current environment is somewhat unsettling.

Complicating things is the consumers growing disdain for advertising, which the New York Times profiled in a recent article entitled: “The Advertising Industry Has a Problem. People Hate Ads” in which it chronicles some of the attitudes and behaviors being exhibited by consumers that could have a profound impact on the industry. In the article, the Times referenced a recent report from Group M, which put forth the proposition that these are “dangerous days for advertisers.”

Let’s face it, there are few “tried and true” approaches that marketers can fall back on to guide their strategic and resource allocation decisions in this environment. Further, given the rate and rapidity of change from a legislative and technology perspective there are simply not that many industry guideposts to assist marketers in effectively charting a course forward or in evaluating progress.

While we believe that there will be a contraction in the supply chain, marked by a consolidation of agency brands, consulting firms, martech solutions providers and media outlets, we don’t believe that this suggests a return to simpler times.

To reduce the level of dissonance, marketers will likely seek to streamline their “world” by rightsizing their agency networks, clarifying roles and responsibilities among their suppliers, transitioning certain work in-house and taking a more considered and cautious approach to the adoption of “shiny new objects” whether related to technology or messaging options.

Given the continued focus by their C-Suite peers on marketing performance, CMOs will maintain a dual focus on driving revenues, while achieving efficiencies across their supply chain to boost working dollars as a percentage of total marketing spend. This is not an either/ or option. Recognizing this “reality” an advertiser’s agency and consulting partners can provide critical support by focusing on the identification of waypoints on the path to performance, rather than pursuing a grandiose focus on future-think outcomes. In the words of 17thcentury Japanese shogun leyasu Tokugawa:

“Let thy step be slow and steady, that thou stumble not.”

 

 

What is the Key to Client-Agency Success?

2 Dec

client-agency relationship successCollaboration? Two-way communication? Transparency? Respect?  Certainly.  But these positive relationship traits are present in many client-agency relationships that fail to withstand the test of time. Thus there must be another reason that the average tenure once measured at 7.2 years in 1984 and 5.3 years in 1997 and pegged by many at less than 3.0 years today continues to wane. 

The factors often cited for this decline include; client-side marketing turnover, shortened tenures of CEOs and CMOs, agency leadership turnover and clients outgrowing an agency’s capabilities to support their marketing needs.  There is no question that these events can play a contributory role in changing the dynamics of an advertiser’s relationship with its agencies.  However, these are also factors which have been effectively dealt with by advertisers and their agency partners enjoying long-term relationships.

Think about the typical start to a client-agency relationship:

  1. Review conducted
  2. Agency selected
  3. Contract negotiated
  4. Work commences
  5. Both parties settle in to the day-to-day pattern of creating and distributing ad messaging

Most experienced marketers and agency executives have seen this routine repeat itself time and time again.  The common denominator is that events progress from a competitive review to initial campaign development in short-order at the expense of a deliberate, considered on-boarding process.  Out with the “old” partner and in the “new” with virtually no transition overlap or time for the new agency to truly get up to speed on a client’s business.

So what is the missing link?  Most advertisers have not embraced the discipline of supplier relationship management (SRM).  Too often, advertisers invest few if any resources in strategically planning for and managing the interactions with each of their agency partners or in clearly identifying the roles and responsibilities of each agency in their marketing services vendor network.  

Letters of agreement, statements of work, agency staffing plans and remuneration agreements are necessary relationship management tools which provide guidance to both advertisers and agencies in the area of contractual expectations, controls and reporting.  However, few would consider these items as a replacement for sound operational planning that clearly lays out a governance framework, the tenets of organizational interactions, expected behaviors, ground rules for collaboration and a definition of what constitutes success in the context of the relationship and in-market performance. 

When one considers the size of an organization’s marketing budget and the importance of that investment in the areas of demand generation, brand building and share accretion it is curious that the industry hasn’t more readily adopted SRM. 

Changing agencies is costly and can be fraught with risks to an advertiser’s market position and financial performance.  Thus it stands to reason that an organization should be prepared to make the requisite investment in its marketing supply chain to develop solid, long-term agency relationships predicated on the effective and efficient stewardship of their marketing spend to attain superior results. 

Given the potential benefits of SRM to marketing agencies, it is a wonder that they are not leading the charge on this front as a means of extending their tenure and enhancing their positions as strategic contributors to their clients’ business.  Regardless, the benefits to stakeholders on both sides of the client-agency relationship are to numerous and meaningful to ignore. 

So, if you’re contemplating a change in agencies, use the event as a starting point for the application of SRM to your organization’s agency network.  In so doing you just may reap the benefits of the words intoned by Henry Ford;

“Coming together is a beginning.  Keeping together is progress.  Working together is success.” 

 

 

 

 

Do Perspectives Drive Outcomes?

4 Jun

By way of background, I have spent my entire career as a marketing professional.  Of note, I have both advertising agency and client-side experience in addition to having worked in the field of marketing accountability, auditing marketing spend and marketing agency performance.  Hence, I have always been perplexed by the notion that marketing executives were thought by some to be unwilling participants in working with their peers in procurement or finance to help them better understand and assess the stewardship of an organization’s marketing investment.

I don’t believe that anything could be further from reality.  The truth is that the vast majority of marketing professionals have an inordinate sense of obligation to go along with a fiduciary duty to invest their organization’s marketing budget in a manner that will yield the greatest possible return… whether that is brand positioning, revenue generation or market share increases.  To that end, marketers and their agencies work diligently and tirelessly to make every dollar invested work as hard as possible.

Of note, many industry pundits feel as though advertising agencies have fallen from their pedestal and position of respected “partner” to that of a “vendor” who does little more than sell their wares for the best possible price to the highest bidder.  In spite of the fact that the average client-agency relationship tenure is a few years rather than a decade or more as in the recent past, categorizing an agency as a vendor unfairly diminishes the role and contributions made by both the agency community and the client-side marketers that direct their efforts.

Thus, it was no surprise to see the results from CMG Partner’s recent survey that found CMOs had expanded their roles and perspectives within their organizations, becoming something akin to a “CEO of Marketing.”  The trying times related to the global recession and the downward pressure on marketing spend at a time when organizations sorely need to drive demand generation, while challenging, have forged a stronger breed of senior marketing executives.  The report also recognizes that while the marketing profession has made considerable gains in terms of greater corporate influence, it is on “the threshold, rather than in full flower.”  The report concluded that the CMO must “not only earn his or her place at the table” but also “his or her voice.”

So how can marketing executives take advantage of the upward corporate trajectory to achieve broader authority?  One answer would be to fully embrace the use of independent third-party compliance and performance audits to improve corporate transparency into all facets of the marketing supply chain and openly share how an organization’s investment is being stewarded by the marketing team and their agency network.  Transparency and recommended improvement opportunities can help to further the understanding that other corporate stakeholders have with regard to marketing plans, processes and outcomes.  Further, independent reviews of the efficiency and efficacy of the marketing spend can benefit marketers by building peer level trust in their resource decision-making framework and the competency of their agency partners.

An independent assessment of a marketing agency’s contract compliance and performance does not emanate from a lack of trust on the part of a client organization.  Advertisers that have embraced progressive corporate governance initiatives have an obligation to ensure that the large sums of money being invested in this important area are being managed capably and in concert with the terms and provisions of the client-agency agreement.  Thus, the agency community, like any good corporate partner, should both welcome and support a client’s efforts to hold marketing accountable to the same standards that other functions within the organization are held to.  Agencies can benefit from the process as well.  Both as it relates to the independent validation of the investment that they make in the relationship as well as to use the compliance audit process to better align their resource investment and remuneration with the client’s business objectives.

In the words of Michael Josephson, one of the United States’ most sought after ethicists:

“What you allow, you encourage.”

Interested in learning more about the potential benefits of a marketing agency compliance audit?  Contact Don Parsons, Principal at Advertising Audit & Risk Management for a complimentary consultation at dparsons@aarmusa.com.

Marketers Reassessing Use of Digital Agencies

15 May

online mediaInvestments in digital marketing have grown significantly over the last several years.  In addition, there have been unprecedented improvements in technology platforms and applications to support the effective and efficient distribution of messaging via digital channels, fuel an expansion in data analytics and targeting capabilities, speed the deployment of web-based tools to enhance B2B and B2C marketing efforts, etc… As a result of these trends and CMOs desire to drive value within their marketing vendor networks, they are evaluating the potential to shore up their internal resources and capabilities in preparation for transitioning portions of their digital activities to in-house teams.

And why not?  Client organizations drive strategy, manage integrated go-to-market strategies, own the databases that fuel targeting and resource allocation decision making and are highly sensitized to their businesses needs and opportunities.  CMOs clearly sense that they have the potential to streamline their marketing vendor networks, drive costs down and build their in-house competencies as a means of delivering enterprise value and in-market success.

This does not signal the end for digital agencies. Quite the contrary, many digital agencies recognize the economic and market forces driving these decisions and are working hand in hand with their clients to facilitate the transition of select tasks to in-house environments, assisting in the sourcing and training of client personnel and helping to redefine their roles in the digital value chain … Read More.

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