CEOWORLD magazine - Latest - CEO Insider - CMOs are facing the perfect storm – a consistent strategy and a new agency model can provide shelter!

CEO Insider

CMOs are facing the perfect storm – a consistent strategy and a new agency model can provide shelter!

I have seen the word “trouble” associated with the role of Chief Marketing Officers (CMOs) quite often lately. For example, in a Harvard Business Review article entitled Why CMO never last(July/August 2017). The authors, Kimberly A. Whitler and Neil Morgan, outline their research, which found that CMOs are the C-suite execs currently facing the biggest challenges.

These challenges have a real impact. In their February 2017 study “Age and Tenure in the C-Suite”, people and organisation advisory firm Korn Ferry found that the average CEO term in the US lasts eight years, while CMOs keep their jobs only for 4.1 years. This number goes down to 3.6 years when solely looking at the consumer industry. These statistics give a clear indication of the high levels of fluctuation at the marketing helm of larger companies, which can only lead to one of two conclusions: either CMOs are dissatisfied with their job specification and responsibilities and leave early, or their CEOs are unhappy with their performance and let them go very quickly.

Whatever the trigger is, I see three main issues faced by CMOs, which are together creating the perfect storm.

The responsibility paradox

The first of these issues is widely discussed in the HBR article. The authors’ theory is that CEOs usually expect CMOs to drive company growth. However, in most instances the job design doesn’t match this expectation. If the CMOs mission is to generate growth, their direct responsibility should span growth determining duties such as pricing, sales management, public relations, e-commerce, product development and distribution. But, as the study shows, CMOs are mostly focusing on marketing communications. “Expectations typically far exceed the actual authority given the CMO”, conclude Whitler/Morgan. You don’t need to be a rocket scientist to detect that this mismatch of expectations leads to frustrations on both sides, and keeps the revolving door spinning.

According to Whitler/Morgan, the way to fix the responsibility paradox is to match responsibilities of the job’s scope right from the very start, negotiating and agreeing on realistic KPIs that relate to CMOs direct area of decision-making power.

The fragmentation challenge

The second problem CMOs have to deal with is the fragmentation of communications channels and target audiences, which blurs the lines between marketing disciplines. Hence reaching and engaging with customers is getting more and more complicated. Another segregation amplifies this complexity. Brand and reputation management often reside in different organisational structures. Brand related communications is the CMO’s responsibility, whilst reputation management, which includes corporate communications/Investor Relations, CSR and thought leadership, is usually in the CEO and/or CFO realm.

Both issues can be addressed with a two-pronged approach. First, taking a holistic view and combining responsibility for brand and reputation management. Second, developing and implementing a concise engagement strategy across all channels, with synchronised messaging and sharable content. Here again, the CMO has to be in the lead, otherwise target audiences can easily get confused by different messages from the same company – which will negatively impact both the brand and the firm’s reputation.

The consultancy inertia

More than ever CMOs have to rely on strong business partnerships to tackle these challenges. However even in that CMOs are facing a challenge, as the way that traditional advertising agency networks operate, with their publicly listed marketing holding companies, is facing questions.

Holding company results are deteriorating. Management consultancies are stirring up the market by acquiring agencies in the digital, branding and crisis communications sector. And mainstream business publications, as well as advertising industry media, are starting to sing a potential swansong for the traditional holding company model.

More than ever, agency networks have to focus on new business while down-sizing units to reduce the cost base. They are balancing the demerging of unsuccessful take-overs from more optimistic days, with chasing acquisitions of digital boutiques to hold pace with developments across markets. These are all appropriate management tasks – but none of them has anything to do with client needs, let alone helping CMOs to create demand and accelerate growth for their brand(s).

The solution to address the consultancy inertia is relatively simple: a new agency model is required to better support CMOs in their job.

Challenging conventions of the marketing industry

When I speak with CMOs they usually mention three things they expect from their global marcomms suppliers:

  • Excellence, or – in other words – market shaping, strategic and creative solutions that foster demand and help building the client’s brand and reputation. CMOs want – and need – global business partners, who will challenge their brief or direction given if necessary, who are bold, honest and not afraid of losing the account if they defend their point of view.
  • Value, which is determined by demand creating solutions and contributions to growth. This can only be achieved if the client has full transparency on how money and resources are allocated so that best solutions for the customer can be achieved.
  • Speed, is critical. Not only in terms of turn-around time for creative solutions, but also in helping to adapt swiftly to changing markets and trends. CMOs need to be convinced that their marketing communications partners will help them stay ahead of the competition.

The way to help CMOs to be successful in their challenging jobs is to overcome the consultancy inertia, and innovate an old-fashioned business model. That’s what we did together with our client Jaguar Land Rover (JLR). We created a new agency model: a client/agency joint venture called Spark44.

We introduced the single client agency in 2011 with a total of 100 marketing communications experts. Today, we have over 1,000 employees focusing on the two iconic premium brands globally with teams at 18 offices, in 16 countries on five continents and delivering solutions across the full spectrum.

When we started our joint venture, JLR sold approx. 300,000 cars per annum. In May this year JLR published their annual 2016/17 sales figures: with over 600,000 cars we mutually doubled annual sales compared to 2010. And 2016/17 saw a 17% increase over last year’s results – We are keeping pace.

The good news for CMOs: there are alternatives out there. You just have to challenge conventions. The client/agency joint venture did exactly that – and hence has been a great success for JLR, and for Spark44.

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CEOWORLD magazine - Latest - CEO Insider - CMOs are facing the perfect storm – a consistent strategy and a new agency model can provide shelter!
Ralf Specht
Ralf Specht is a visionary business leader, highly sought-after speaker, and creator of the Soul System™, a framework that aligns value-creating employee action with broader corporate strategy through shared understanding & shared purpose. As a founding partner of Spark44, he was the architect of an innovative, industry-first joint-venture with Jaguar Land Rover, which he grew to a global revenue of $100+m and 1,200 employees before it joined forces with Accenture Interactive in 2021. Previously, he consulted with global companies and brands for more than two decades with McCann Erickson. He is the author of Building Corporate Soul: Powering Culture & Success with the Soul System™ from Fast Company Press, and the forthcoming, Beyond the Startup: Sparking Operational Innovations for Global Growth. His driving vision is to make soulless companies a thing of the past.

Ralf Specht is an opinion columnist for the CEOWORLD magazine. You can follow him on LinkedIn. For more information, visit the author’s website.