CMOs Who Seek Higher Sales Growth Have Three Strategic Options (after abandoning "business as usual" marketing approaches)
Neither holding company relationships nor frequent agency reviews nor omnichannel scopes of work have delivered improved sales performance over the past 15 years. What needs to be done?
Credit: Robert Weber, The New Yorker, The Cartoon Bank
The dramatic marketing innovations of the past fifteen years have not solved the marketing performance problems faced by CMOs at major advertisers. Each of the industry’s major innovations — working with holding company relationships, frequently changing agencies and developing multi-channel scopes of work — have each been logical in their own way, but despite the logic and the relentless pursuit of these options, advertisers have failed to generate the kind of sales growth they enjoyed before 2008. Sales performance has been moribund.
Something important has changed in the way that customers make their purchasing decisions.
Strong brands are no longer as strong as they used to be. Marketing communications, designed to increase brand equity and reinforce awareness, are not delivering the desired outcomes. The promise of “personalized targeting” and the “delivery of messaging across multiple platforms” has caused more consumer annoyance than purchase motivation. The major investments in omnichannel media, and the extensive creative scopes of work designed to make media sing, have not delivered the goods.
“Business as usual” is not the solution for today’s CMOs — CMOs are already paying the price for moribund sales performance by being replaced in their jobs (along with their agencies) every 3-4 years, twice as fast as their CEOs.
What’s to be done?
Instead of asking “what should our spend, mix and scopes look like for the coming year,” and working with agency partners to answer these questions, CMOs need to get back to basics:
Why are our brands not performing as they did in the past?
What is the nature of each brand’s performance problems, and what kinds of marketing programs will solve these problems?
If we do everything right in marketing, what is the “full performance potential” of our brands? How good can they be, brand by brand?
What spend, mix and creative scopes will get us there?
CMOs need to consider three radical options for the management of their Marketing Departments and agency partners:
Personally take the initiative to upgrade current agency relationships so that all associated agencies and the Marketing Department are focused on improving brand performance rather than simply delivering media and creative deliverables. AstraZeneca is vigorously pursuing this approach in its biologics product area, working under the leadership of Sabrina Traskos. head of Commercial Procurement. (See Fixing Agency Relationships, One Brand at a Time -- the Agency Partnership Certification Program). “We have to embrace our media and creative agencies as strategic partners who have entirely new goals,” she says. “They have to help us improve brand performance – and we have to make it possible for them to succeed in this role, overturning any dysfunctional client practices that get in the way.” In the Agency Partnership Certification Program, brand performance problems are clearly identified, and scopes of work are created to solve the problems. The exercise is a joint initiative between AZ’s biologics brands and their holding company agencies at WPP, IPG and Syneos.
Abandon current agency relationships and hire “performance-focused” agencies in their stead. Huge, the creative consultancy, led by CEO Mat Baxter transformed itself in 2021-2022 to focus exclusively on helping clients accelerate growth. (See Wasting No Time, CEO Mat Baxter Leads a Dramatic Transformation of Huge). GALE, under CEO Brad Simms, has a similar strategy and has achieved spectacular growth for itself by focusing on helping its clients grow. (See GALE, the Business Agency, Reveals its Successful Growth Strategy). Both Huge and GALE take “proactive” rather than “service-oriented” approaches with their clients, believing that relationship success can only be achieved if clients succeed in achieving their performance goals.
Bring the content in-house so that the CMO can assert more creative control over the Corporate Marketing Department — and use every marketing metric available to measure marketing effectiveness. Jeff Charney, the previous CMO of Progressive Insurance (2010-2022) grew Progressive’s sales by 10% per year by establishing NinetySix, an in-house, full-service creative agency to act as a creative catalyst for the company’s internal media buying department and its external agencies — designed to develop good-natured “creative friction” to bring out the best creative performance from the three groups. “You can’t always control what happens with the consumers in the market, but you can better control and maximize/focus of all your marketing assets,” Charney said. "Having all the creative levers at my disposal not only made me a better CMO, but also made a difference in our marketing performance.” Progressive’s sales tripled under Jeff’s focused leadership.
Source: Farmer & Company analysis of Macrotrends.com data
Each of these leaders — Sabrina Traskos, Mat Baxter, Brad Simms and Jeff Charney — saw opportunities to overturn “business as usual” marketing practices and focus on achieving increased sales growth in today’s difficult markets.
Their three varied approaches — a full range of options — represent three strategic possibilities for today’s beleaguered CMOs.