At a conference in October 2016, Bob Liodice -- the CEO of the Association of National Advertisers -- posed a clear challenge to its members: “The CMO must get more involved with the activities of their suppliers” (meaning agencies and others who provide them with marketing services). With a deterioration of the relationship between advertisers and agencies, he pointed out that the CMO really needs to steer the ship. There is no room for detachment in any area, particularly media because of its rising complexity and rapid requirements in decision making.
The digital environment has created a great deal of technological disruption and everyone seems to be going in different directions. There are a multitude of digital media options with channels and platforms as well as creative executions. It is further complicated by lack of measurement standards and methods of analytic evaluation leading to ROI. Another hurdle is increased automation and the real time actions to be implemented from data-based considerations. Bill Duggan, Executive Vice President of the ANA, once said “data is a force for good.” He may be right. But how many CMOs really study the data and, more importantly, know how to act on it?
The CMO has, on average, three years and a few months in the job before a change is made. That’s not a very secure tenure. And, unfortunately, the agency then operates in a very nervous mode -- usually too willing to do whatever the advertiser asks and accept whatever the advertiser is willing to pay. Moreover, if the agency is not able to recommend what the advertiser needs rather than only what it wants, it can’t get any worse than that. So yes, the CMO must be totally involved, but that means real learning of new digital innovations and understanding of the most relevant developments that apply to their business.
Another concern is the relationship between the CMO and their procurement personnel. I recall once asking Bob if they were aligned; he said “not always.” To make matters worse the agency doesn’t always see procurement in the proper role. They often see it primarily as a cost-cutting enemy. But procurement is not the enemy if the dialogue goes the right way. Procurement certainly needs to more thoroughly understand the needs of marketing and business investment as well as more efficient operations and waste reduction. But procurement also needs to focus on productivity. In the final analysis that’s where the real value is.
While some say the advertising industry is in a mess, I am more optimistic about its future because I think most responsible people and their organizations recognize the problems and are trying to address the deficiencies. Although there is not always agreement, and oftentimes it gets testy, there is too much at stake for anyone to walk away. Bob Liodice is right about his assessment if the CMO starts to think more about grabbing the mantle and providing the agency with all the information it needs to respond effectively and efficiently and procurement doesn’t reduce the agency to a commodity supplier that only wins by providing the lowest cost.
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