On my last trip to London, I had dinner with a few Chief Marketing Officers (CMOs). The five guys I broke bread with run marketing at global CPG, retail and financial services companies and control over $10 Billion in marketing budgets. As you can imagine, these are very seasoned, senior and highly accomplished professionals. They are also real nice people. Although it was supposed to be a casual and informal dinner, we landed up talking business. Surprised, anyone?
The conversation was wide-ranging. We talked about a number of challenges that we face in today’s highly fragmented and complex marketing environment. The ones I want to share with you today are about their thoughts and perceptions about service providers (specifically, agencies). As the only “service-provider” at the table, I found their insights fascinating. I hope you do as well. Here is what they had to say:
Deteriorating Strategic Capabilities.
All of them believe that the quality of strategic capability from their agencies has deteriorated over time. According to them, most agencies deliver strong tactical programs but struggle to provide thinking and ideas that strategically connect with their business needs and goals.
The core reason for this seems to be the lack of talent. Given the increased complexity in the marketing eco-system, they find that none of their agencies have people capable of understanding this complexity and addressing it strategically. In my view, today’s marketing world can be compared to the Tower of Babel… we have different people (functional experts) speaking different languages – each believing their language is the most important and should become the “national language”. On the other hand, we don’t have many multi-lingual people who can manage this complexity. So, we live in tribes further exacerbating the fragmentation, siloism and parochial mentality that hampers a holistic approach.
These guys miss seasoned pros that understand the strategic needs of their business and can help define holistic solutions. As one of them said, “I don’t have a partner at the agency that can lead me. I have to do the leading. It’s exhausting.” In today’s environment, these guys need to think strategically, balance art and science, become comfortable using data to make smart decisions, be responsive to social effects of their programs, understand how to continue innovating, manage their internal stakeholders and their CEO, while training their people – all knowing that a few quarters of weak results and they’re toast. They do want partners who can lead them, their teams and their business. We, in the world of agencies are found wanting. Who will take on this challenge and solve?
No Lead Agency. An Integrated Agency Team.
The second area emerged seamlessly from the discussion around weakened strategy capabilities. They are all evolving away from the “one lead agency” construct. This is not out of choice but out of necessity. In the old days, the advertising agency was the lead because they controlled the largest amount of spend and were responsible for the (advertising) idea. Now, due to media and channel fragmentation, these guys have multiple agency resources for their different needs. No one agency has the majority of the spend, except the media agency. However,despite all their efforts to move up the value chain, they are still not seen as credible brand stewards.
Another reason for this approach is how the idea development process has changed. Today, ideas are generated by multiple agencies. For example, the promotion agency for the retail marketer created the idea that drove all their activities over the holidays. In the case of one of the two CPG marketers, it was the digital agency who created the idea for one of their brands. In both these cases, the other agencies on the roster executed the idea in their domains. The ad agency made TV and print, CRM agency developed DM and emails, etc.
As we discussed earlier, these CMO’s don’t feel like they have credible strategic partners with the ability to lead “Integrated Marketing Teams”. They compensate for this gap by adding folks to their teams. As they all claimed… not the best answer but the only one they have.
This is another opportunity for us as an industry. We continue to talk about how we need to become more valuable. Let’s commit to developing multi-lingual talent who can partner with and lead these CMO’s in today’s multi-faceted environment. They will embrace us.
Focus on Customers. Not just Prospects.
There is a clear shift of resources being deployed against their existing customers. They are no longer focused on acquisition, penetration, and share-of-voice discussions. The focus in on how to keep their core customers and get them to engage at a deeper level. Quite gratifying for me, personally, to hear. For those of you who have read my book, Brand Rituals – how successfully brands bond with customers for life, you know that I evangelize this POV. CPG marketers are doing this by creating digital-first shopper programs. In retail, they a delivering omnichannel capabilities and differentiating on service and value-added attributes. I do believe that this shows huge progress. Just three years ago, the conversation would have focused entirely on acquisition programs or programs to maintain awareness and drive trial. The fact that they are paying significantly more attention to their core customers is, in my mind, a surefire strategy to success. They have invested in building robust databases and are linking this data to their customers’ activities across all channels so that they can create experiences that drive engagement to deliver equity – for the brand and the business. I call this approach “RoE2 (return on equity – squared). This approach helps brands create a Brand Ritual(tm)
This was just a part of the discussion that evening. Absolutely, positively, inspiring. I would like to get feedback from you – marketers or service providers – on the themes discussed above. Are we strategically deficient? Do we need people capable of leading holistic marketing and business issues? Should all marketers commit to existing customer focus?
Would love your thoughts and comments. Let’s talk.