How Nationwide Improved Brand Scores While Cutting Agency Fees

CPA-Turned-CMO Jauchius Unleashes Six Sigma Black Belts in War on Waste

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Nationwide: 'Vendor' is poison.
Nationwide: 'Vendor' is poison.
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What happens when you make a certified public accountant the chief marketing officer?

With Exec VP-CMO Matthew Jauchius at the helm, the collaboration between marketing and procurement at Nationwide Insurance has led to a trim in agency fees of 7% each of the past three years. It's also resulted in the company's "Join the Nation" campaign -- aimed at "the head and the heart," Mr. Jauchius said --which increased unaided brand awareness 28%.

Mr. Jauchius, who has worked in professional-services procurement himself, outlined his approach in a presentation at the Association of National Advertisers Advertising Financial Management Conference in Boca Raton, Fla., last month. He also worked mainly in marketing at McKinsey & Co. before coming to Nationwide eight years ago. And while procurement reports to the chief financial officer at Nationwide, not Mr. Jauchius, he considers its practitioners valued advisers.

Nationwide exec VP-CMO Matthew Jauchius
Nationwide exec VP-CMO Matthew Jauchius

He sees his own CPA training as an asset. "If the CMO today cannot be analytical, cannot understand the technological forces at work and, most importantly, speak as a pure line strategist, then marketing gets looked at more as a cost center," he said, "something we have to do vs. the investment it really is."

Despite total agency-fee reductions of more than 20% in three years, Mr. Jauchius said, "I have reinvested more than that." More than half the reinvestment has gone toward new work for existing agencies or what he calls media partners, eschewing the dreaded "V" word. "Using the word 'vendor' is poison," he said. "This is not a margin-extraction game."

It is, however, a waste-reduction game, and he's focused much of his cost-cutting on making the company's marketers more efficient in how they brief assignments and clarifying scope of work for agencies, including Nationwide's in-house creative and digital agencies.

Defining scope of work remains one of the bigger and more important challenges, particularly in digital and social media. One advantage of in-house agencies is having a better understanding of operations at external agencies. Nationwide tends to consolidate work with agencies that "play ball" with it, he said.

Mr. Jauchius has three "master black belts" in the Six Sigma process-improvement approach on his marketing team. Funds they free up by cutting waste "don't get swept by finance," he said, but are reinvested in marketing. That's particularly important, because Nationwide's $400 million budget ranks seventh among big players in the category, which collectively spends more than $6 billion a year.