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The CMO Mandate Paradox

A lot of discussion in recent years has been around too much allocation of comms spend going towards tactical and digital activities. While some point to the lobbying muscle of Facebook and Google, and some say the blame is on an industry too focused on being trendy, there is one thing few focus on: the lack of hierarchy in marketing today.

Generally, most people in digital advertising are not evil or sinister. They are just trying to maximize the value of clients budgets in relation to some given KPI:s. In the tactical space, they are doing their best efforts. And if their client contact offers them a higher budget, well hey, someone on the client side has probably done some diagnosis and strategy work to support that allocation of budget.

The same goes for the people at the media agency, the creative lead agency, the performance agency and the agency working with retail. They all maximize the value of their field, and the overall strategy is not their responsibility.

But what if there has been no overall strategy at all?

If there is no conductor, each member of the orchestra will just start playing louder and louder. Even the best violinist in the world has difficulty finding his or her role in an orchestra without sheet music or a conductors’ guidance.

And even if it was possible for that violinist to learn in detail the relative roles of every instrument in the libretto, that would just be inefficient: The main idea of having a conductor is to not have to make all 90 musicians learn the overall picture in detail, but allow them to become specialists. And at the same time to allow the conductor to focus solely on conducting, being able to control every section of the orchestra and to make them work together to create beautiful music.

As different disciplines within marketing are playing their individual tunes, we risk missing out on synergies. Also, if there is no conductor with an overview of all elements, people risk trying to impose learnings and models relevant to one discipline to others, even though they do not apply there. While the insights from Binet & Field regarding a trend of over-investment in digital is true within comms, it may not apply to product development or distribution. While new digital KPI:s and A/B testing can be relevant for tactical comms, it may be all wrong when it comes to branding.

What might then be the ground for a development with more siloed disciplines within marketing? To my mind three interconnected trends drive this development:

  • A lack of mandate for overall orchestration of the things that drive growth
  • An increased focus on short term profits
  • The fear of missing out on new trends and technologies

Marketing is traditionally a discipline encompassing all activities that generate money to a company. As outlined by Mark Ritson et al there is a great importance in diagnosing your market, setting a strategy, and then executing that strategy across both Product development, Pricing, Promotion (comms) and Place (distribution). With a helicopter view across all these elements, you can see how they interact, make informed trade-offs between different initiatives, and work long term.

However, recently CMO:s have lost a lot of control in this area. When Dentsu surveyed 1000 CMOs across the globe, many of the top responses indicate decreasing control: Lack of integration, insufficient control and competing agendas with the rest of the C-suite are all key challenges for implementing the marketing strategy.

As summarized in the very pertinently titled article Why CMOs are only lasting as long as Spinal Tap drummers: “First, finance officers took away pricing. Then, strategy officers who took away market analysis and strategic planning. Product officers took away product. Operations and logistics officers took away distribution. Sales officers took away sales.”

So the mandate of the marketing function is diminishing. At the same time, the same function is still responsible for growth, a paradox that some say may be the cause of CMO:s being the most short lived members of the C-suite. This leads to the second underlying cause of the marketing cacophony: Short termism.

There are a lot of reasons that we are getting more short term focused. Stock markets looking at every quarters sales figures is one driver. Another is the influx of more and more short-term data claiming our attention. On a larger scale, some say that we are in a midst of a global trend across not only marketing but society at large where we are more tactical, and data focused.

The short term focus leads to wanting to maximize the value in each channel or discipline straight away, without taking time to see how such a push affects the bigger picture. “Can we save money in distribution by going digital – let’s do it! How does the loss of physical outlets affect our service level and premium brand position? Dunno, that’s not my responsibility and I don´t have time to check.”

Digitalization, in turn, leads us to the third Horseman of the marketing Apocalypse; FOMO.

From Apps to social media to the current day holy grails of AI, AR and Agile, there seems to be and increasing trend in wanting to be part of the latest marketing trends. And as digitalization adds new needs, new expertise is needed, the traditional lead agencies lose their grip of the overall picture. Social Media agencies, performance agencies, digital agencies take control of different aspects of the puzzle. And perhaps a CMO is too afraid to reveal a lack of understanding to take charge. Better let some new CXO take charge of that new thing.

That is why we end up with a lack of central leadership. And as a consequence of that void, the different instruments in the orchestra start riffing on their own solos. Suddenly the “CSMO” and the social media agency start developing their own diagnosis and strategy, diagnosis and strategy based only on achieving their siloed KPI:s. The Head of Product Development develops his/her own view of the world and strategic prioritizations, perhaps even finding a target group definition that suits the product developments. And then you end up with TikTok Strategies, retargeting marketing that destroys brands, too much consumer centricity in branding, not enough consumer centricity UX, and a general lack of consistency across disciplines and time.

So what might be the remedy? It probably comes down to a clear division of labor: As the complexity of the marketing game increases, each player needs to understand the overall picture, understand what role their instrument plays in it, and at least have some rudimentary understanding of what roles others are playing. Getting a bit humble. If you say; I am fully aware I only play one of many instruments, but this is how I think mine should be best played, is so much more graceful than saying THIS IS THE TRUMPET LET’S PLAY MORE TRUMPET.

  • People in digital/social media: Binet & field DOES show we have gotten too tactical
  • People in traditional brand building: There ARE interesting new channels and formats within digital that can play a great role in tactical advertising
  • Comms people: Outside of Comms, digital DOES have interesting potential within the extended product experience (CX) and distribution
  • People in media tactics: Sometimes the value of consistency MUST trump channel adaptation
  • People in branding: Sometimes a channel I so relevant it CAN warrant doing some adaptation to fit messaging
  • Etc

As for the role of overall vision, the CMO probably needs to take more charge in the boardroom – by leaning on the science behind marketing and getting more savvy in new technologies and buzzwords coming along. Understanding how these things can contribute to growth is key to arguing they should be subordinated to the growth agenda.

There is no shame in doing great tactics. But it should not be confused with strategy. There is no shame in being the greatest violinist in the game. But that skill should not be confused with – nor substitute – the need for orchestration.

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Does innovation play a role?

In 1994, the success of Dumb & Dumber (Box office close to 250M USD) had a lot to do with the performance of Jim Carrey. In that same year, John Travolta made an iconic comeback role from a career slump with his iconic portrayal of Vincent Vega in Pulp Fiction (box office 220M). I think it would be safe to say that although each played their respective roles with great aptitude, they could not have switched roles and performed as well.

An even less feasible idea would be to have one of them play both roles, not to mention the idea of having one of them take on ALL roles in both productions, from lead actor to lighting assistant. Yet that is how we often look at innovation and new technology. On one side the evangelists, claiming AI/AR/Voice/Chatbots will revolutionize every aspect of marketing. On the other side the sceptics, who say this is not feasible and therefore dismiss the new thing in its entirety.

As with actors, a lot of tools within marketing can work fine in one role but be lost in another. This is true of classic campaigning (an emotional 45 second TV ad is great at driving brand but poor at driving short term conversion, DM or SEM is the opposite). It is also very true when it comes to innovation.

Over 10 000 Google hits for stuff that will change marketing forever

I would argue that innovative techniques, platforms and tools can be very useful, as long as you are careful in what role you cast them. Of course, this all relates back to the principles of strategy vs tactics. “Look at the script before to assign an actor to a role” is easily translated to “look at your strategy before implementing tactical activities”. (See  JP Hanson , Mark Ritson  among others).

So, what are the potential (tactical) roles for innovation?  On an overall level, I see a handful;

Advertising distribution channels

A very clear and concise role; Getting your message in front of consumers in efficient and effective manner. This is an area where innovation is discussed a lot, AI supported programmatic buying, new social media targeting opportunities and formats, as well as influencer marketing being topics du jour. A few words of caution

  • The new innovation happening within media channels has an impact primarily in tactical communications, rather than broad reach channels. Don’t confuse the two, as Pepsi did in 2010 when they shifted millions in TV spend to a Facebook Social Good project, loosing half a billions worth in market share to coke.
  • New channels need to have some sort of reach and need to supply relevant ad formats in order to be a significant part of media strategy. (No, Smart Speakers is not a Distribution channel strategy. Skip down to Storytelling instead

Creative fuel / Storytelling

This is an interesting segment, and something often overlooked by the sceptics. Even if a new shiny thing has no potential impact on the overall business, the media or the customer experience, it may be useful as a tool to tell a story. Look at how Amazon have used drone deliveries and stores without checkout to promote their image of them as driving the future of retail. A recent example from Sweden features a direct heating company using AI and smart speakers to talk about heating and human warmth.

 

While this involves new tech, the message is distributed through old fashioner PR, TV and online video, so no media innovation. The effort does not really involve product or user experience innovation. It is just an innovative way to tell a story. Which is not a bad thing!

(Just look at Volkswagens’ use of (very basic) door lock technology from “The Force” to tell a story about creating nice cars that fit family needs.)

Another curiosity, which has perhaps not generated anything really significant yet, is the AI creative director. Both McCann

and Lexus  have tried it, and it seems to render either fairly generic or fairly crazy stuff.

 

Product and business development

Of course, new technologies can disrupt industries and improve products, or render them obsolete. The classic case in this field is photographic film company Eastman Kodak, who went from peak at 31 billion USD value in 1996 to filing for bankruptcy in 2012. However, this is a rare and extreme case, too often taken as proof that all companies must “innovate or die”. Also, Kodak showcases a need to innovate core product offering. That does not automatically mean they needed to innovate their creative or media strategies.

CX/UX

IKEA Place. Actually useful AR, rather than just PR content. 

Another interesting field is the ecosystem surrounding a product and service, the users’ interface: support and customer service, user guides and inspiration, all things aiming to make using the product a delight.

In this field we are seeing a lot of talk about chatbots and AI, as well as mobile app developments to make the interaction with your bank/car/consumer electronics smoother. Everything from automated customer service bots to smart home IoT-apps can probably create real impact and valuable change within a relatively short time frame.

 

So, there are relevant uses for a lot of new channels, technologies and innovations in different aspects of marketing. The key thing to understand is that there is not one thing that will revolutionise everything from distribution to user experience and media. The key is to write your script first, and then examine each new thing against the potential roles it could play.

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Marketing strategy in four simple (?) steps

The other day I had the pleasure of listening to a line up of international marketing gurus. Mark Ritson, Wiemer Snijders, Rory Sutherland, and JP Hanson had all come to Stockholm for a marketing event (SprintAd-dagen). While none of the stuff was perhaps new or revolutionary, it served as an important (and entertaining) reminder of the principles and frameworks that apply to marketing. As all of the ideas are adjacent and inter-linked, below are my take outs area by area rather than speaker by speaker. So below, I give you the foolproof guide to marketing in four simple steps:

1    Start at the right end

Sounds simplistic and basic but is something often forgotten when we get caught up in day to day operations. We need to be stringent in first analysing the market as best we can, then formulating our strategy, and last executing our tactic measures.

The diagnosis phase is to establish all we know about consumers, competitors and trends. It may also have the benefit of reminding you that nobody cares about your brand.

The strategy phase includes goals, KPI:s, prioritised segments etc.

The tactics phase is where we use the classical tools of marketing (Product, Price, Distribution and Comms).

This area was touched upon by JP Hanson and Mark Ritson. JP added that we are all subject to confirmation bias and halo effects. That means we are prone to post rationalising decisions and making isolated observations into rules of thumb when it suits our purposes. He also reminded us that a lot of new trends appearing are potential tools in the tactics phase, rather than something that should affect strategy.

Mark Ritson added a few really interesting remarks;

  • As the results of your market becomes the multiplication of the three phases, it is better to do all three at an ok level, than to excel at two and fail at a third. Distribute your efforts accordingly
  • Comms is one third of one of the three phases. CMO:s should allocate efforts accordingly (dialling back a less than healthy over- focus on this area).

 

2     Base your prioritisation of segments and goals on science

 

Under this headline, there are a lot of different studies and models basically pointing to two factors:

  • Loyalty is very weak, with most product buyers buying very rarely
  • Long term emotional branding advertising and short term sales driven advertising serve different purposes, imply different strategies, and have different KPI:s.

The first point was addressed by Wiemer Snijders, who used the banana as a model to illustrate the data. The banana effect in essence mean since a lot of people by your product rarely, you must be broad in your communication. He also talked about how brands have a meaning that to some extent is only useful if it is universally known. Imagine if Rolex only communicated their values to a niche group of frequent buyers. The whole status effect of a Rolex would vanish, as no one in the general public would understand the value of what was on your wrist.

 

Regarding the long term versus short term, there seems to be a unanimous vote in the community that the work of Binet & Field is the strategy model to follow. Even Mark Ritson grudgingly concluded that Binet & Fields work was probably the best combination of his own ideas on segmentation and Byron Sharps thinking of mental avaliability.

Also, Mark stated a strategy should be no more than one page, and include no more than 2-3 KPIs/goals

 

3    Be consistent

Daring to be consistent across channels, markets and time was an important take-away.  Advertising and marketing people are only human, and it is natural after working in a brand for a couple of years to get a bit bored with the brand appearance. But, as argued not least by Byron Sharp, distinctive and recognisable brand assets are key to being noticed in a cluttered communications landscape.

Mark Ritson added a few interesting notes from his many years as a consultant to major brands. He mentioned brand “codes”, elements that should be present in all advertising. He went so far as to instruct advertisers to refuse to pay agencies unless they included at least 2 of the brand codes.

He exemplified with Kenzo, where ads always had to include red elements, the signature poppy flower, and the brands ambassador/model against a Paris backdrop. Easily recognisable as Kenzo even if the brand name is removed from the ad, right?

4    Allow for a bit of crazy experiments

 

The final piece I took away was around experimentation. As we as advertisers are dealing with the human mind, which is subject to confirmation bias, post-rationalisation and a whole host of inconsistencies, we must never let 100% of our efforts be data driven. If we do, we will be solving the problems of today, but not hedging against the future.

There are different models related to this, One is the 70/20/10 model (70% of marketing towards optimising bread & butter, 20% towards testing new things, and 10% totally experimental). Another model is the dumbbell model as presented by Rory Sutherland: 80% safe, 20 % crazy, and nothing in the middle. They key element to these models is not getting them mixed up. The purpose, ideation process and KPI:s should be completely different for the two different efforts.

Rory also questioned why creative peoples’ ideas are always audited by structured people, but structured peoples’ ideas are never audited by creatives.

All in all, the collected insights of these speakers gives a comprehensive roadmap on how to address marketing. If you are in marketing, you really should read up on these models and se how they may apply to your business. Or as Wiemer Snijders puts it: Eat your greens!

 

 

 

 

P.S. Speaking were also Dr Emma Frans and Kapero consulting. As they were not on the topic of marketing theory I have left them out of this.

P.P.S. Only one woman speaker?