Commentary by Scott Donaton

PLAYING THE MUSICAL CHAIRS CMO GAME

How It Weakens Brands and Unnerves Their Ad Agencies

By Published on .

Pity the poor ad agency CEO.

Consider:

> A deep, prolonged advertising recession and the influence of procurement officers combined to limit growth and squeeze profit margins.

Scott Donaton, editor of 'Advertising Age.'

The public ownership of parent companies, meanwhile, shifts the focus to quarterly results at the expense of long-term plans. CEOs spend more time trying to make their numbers than paying attention to client concerns.

> The unbundling of media opens a strategy gap that creative shops find difficult to bridge. Many find themselves contributing fewer ideas while executing strategies developed elsewhere.

> Holding company reviews are in vogue, diluting the value of agency brands. Advertising Age recognized and branded the trend more than two years ago, in a cover story headlined "The Rise of the Superagency." At the time, holding-company chiefs privately confirmed but publicly dismissed it for fear of triggering client concerns about conflicts and undermining shop chiefs. But WPP Group's chief executive, Martin Sorrell, winner last week of HSBC's $600 million holding-company review, said in a recent speech he expects more marketers to seek parent-company solutions.

> The advent of digital technologies, the decline of network TV and the search for alternatives to the 30-second spot give rise to all forms of new competitors.

> Now comes hard proof of an issue agency bosses have long grumbled about: the damaging impact of frequent turnover of chief marketing officers at client companies.

Average CMO tenure: 23.6 months
As Ad Age first reported, the average tenure for a CMO is 23.6 months. That's according to a survey conducted by executive recruiter Spencer Stuart, under the direction of Greg Welch.

This number, 23.6, should be painted on the side of every client headquarters, tattooed on the bicep of every agency CEO. There are tremendous implications, particularly for companies that install revolving doors, constantly change strategies, muddy their brands and suffer the results in sales declines (paging Burger King). There are also troubling consequences for agencies.

On the day the survey results appeared, Spencer Stuart and Ad Age hosted a CMO panel discussion in Chicago. The theme was the first 100 days, and the steps a CMO could take to ensure success.

The panelists -- Matt Wiant of Atkins Nutritionals, Steve Horn of Coca-Cola Enterprises, Cammie Dunaway of Yahoo! and the highly personable and surprisingly forthright Carter Cast of Walmart.com -- shared strategies for success, including taking the time to understand the culture, challenges and expectations of new employers. Several recommended that new CMOs make easy moves as soon as they can, to buy time to figure out the more difficult maneuvers.

'Fire your agency'
While they didn't come out and say, "Fire your agency," they didn't have to. Reviews qualify as "easy moves." Dunaway was hired by Yahoo! in June 2003, and by August had replaced longtime agency Black Rocket with Soho Square.

This comes as no surprise to agency vets. "Whenever we get a new CMO [at a client], we immediately treat it like a new-business pitch," the CEO of a global ad agency told me under the cloak of anonymity. "It's disconcerting. CMOs lose their jobs because it's easy for management to blame marketing. When the new CMO gets in place, the easiest thing to do is start a new agency relationship."

Free business advice
Since agencies give away ideas in pitches, reviews are also an easy way for a new CMO to get free business advice. "You get a bunch of ideas, and it doesn't cost a penny," the CEO said. Your job is fun, was my sarcastic reply.

"It's not that bad," he laughed. "Actually, I kind of like it."

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