The New Normal for CMOs

10 Changes That Will Continue to Affect the Top Marketing Job Going Into 2011

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Avi Dan
Avi Dan
The economic recovery is shaky. Consumers are spending cautiously. Unemployment remains stubbornly in double digits. Marketers are facing persistent headwinds and expect them to become a permanent condition. A recent study by Accenture suggested that pessimism is widespread, and almost all of the global CMOs surveyed said they expect their marketing budgets to shrink and reflect the market austerity.

This likely permanent squeeze on budgets will become the new normal. It will force marketers to reassess every practice and reset their approaches. As we near the year's end, it's time to take stock of the changes that will, taken together, continue to radically impact the top marketing job in 2011.

1. The media mix. The media mix will have to become more efficient as it becomes more effective. CMOs will commit to non-advertising platforms as to the 30-second commercial. More will be invested in creating communities, social media, developing apps and utilities. Consumers want their interactions with companies to be efficient and convenient. Companies and brands that will not put digital communications and e-commerce at the center of their business models will risk becoming irrelevant.

2. From acquisition to retention. In an environment in which consumers spend less, focusing on "lifetime value" will become more common. Improving customer retention and loyalty while increasing sales to current customers is a more efficient business model than share-of-market churn strategies, constantly being on the treadmill of acquiring new customers at a significant penalty to the bottom line.

3. Analytics-based marketing. Analytics will become the foundation of the emerging new marketing model, ensuring ROI and efficiencies. Leveraging digital channels and monitoring and optimizing customer data will improve customer engagement. It will provide marketers with greater precision and a better scope of consumer knowledge, resulting in smarter briefs. And it will result in better creative ideas and less waste.

4. Say hello to the CFO. Marketing was traditionally a siloed operation. This is changing. It's moving from a hands-off department to a much more integrated function within companies, whether it's under sales or customer service. Nowhere is this going to be more evident than in the growing closeness between marketing and finance. CMOs are aware that finance is important to their success. For example, when asked which additional skill they wish they had, the answer I hear most often is, "better understanding of finance."

5. Marketing-procurement partnerships. With tight budgets, marketers will look to procurement to help deliver efficiencies in the marketing supply chain. CMOs ought to view procurement as a strategic asset that can help them achieve a more competitive position and profitable growth. Performance-based compensation will probably become more common as agencies will be asked to have "skin in the game."

6. The emergence of creative specialist agencies. The days of the one-size-fits-all ad agency are numbered. Media fragmentation and the splintering of customer cohesion will result in a more selective approach to partnering with creative agencies, as marketers will seek niche expertise. AOR arrangements will slowly fade away as marketers become comfortable with task-specific, project-based assignments.

7. Production unbundling. Just like media agencies were unbundled from the creative agencies in the 1990s, over the next few years we'll see more clients unbundling, or "decoupling," as the practice is known, production from creative. This follows the movement to specialized services as well as a great deal of efficiencies.

8. Media at the center. The proliferation of media platforms and the emergence of an attention economy have made consumers hard to reach. Deciding where to engage with the consumer will become as important as how. Media agencies will emerge as the nucleus of the new brand ecosystem and will evolve from an exclusively paid media model to a more hybrid, paid-earned model and will generally have a more extensive engagement model.

9. Minorities are the new majority. For the first time, more non-white, Hispanic, African-American and Asian-American babies will be born this year than white babies. African-Americans have a buying power in excess of $1.5 trillion. Hispanic buying power is growing at three times the national average. Asian-Americans spend three times as much as Gen Y, and gay and lesbian buying power is estimated at $800 billion. Marketers cannot afford to ignore these consumers.

10. Revised skill set. Marketing no longer controls the conversation with the consumer and occasionally is even banned from it. Consumers form communities and see themselves as entitled to make brand decisions. A forward-thinking CMO should have an understanding of how social media, technology and corporate social responsibility are changing marketing.

Marketers will find the coming years to be a more challenging environment, not just because of the economy and limited budgets. Other resources will be limited as well. Marketing departments will be de-layered as CMOs are asked to do more with less. As those challenges mount, CMOs will have to learn how to navigate through the added complexity of the technological eruption. They will have to go beyond just contemplating it to becoming advocates of the new marketing ecosystem. And they'll have to embrace the speed of change.

ABOUT THE AUTHOR
Avi Dan is founder-president of Avidan Strategies, a marketing consultancy that specializes in marketing operations and client-agency relationships.
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