Budgets, Innovation Squarely in CMOs' Sights in 2011

Cost Efficiencies, Innovative Cultures, New Marketing Technologies Top List in Exclusive Ad Age/Forrester Survey That Takes the Pulse of Chief Marketers

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NEW YORK (AdAge.com) -- Amid recessionary repercussions and the uncertain impacts of health-care reform, Paul Matsen is kicking his marketing budget into overdrive this year. And he's doing that by sinking money into measurable online media and the latest marketing technologies, wanting to be where his target consumers are even before they get there.

The Cleveland Clinic CMO is not alone. Maximizing budget, fostering innovation and building an adaptable marketing organization top the list of priorities for chief marketing officers as they move into 2011, according to an exclusive survey from Advertising Age and Forrester's CMO Group.

Paul Matsen
Paul Matsen

CMOs will continue to push their organizations to experiment and innovate -- but they'll do it with a sharp eye on return on investment.

"The Top Priorities of CMOs in 2011: Ad Age CMO Strategy/Forrester CMO Group Survey," fielded in late December, took the pulse of more than 20 top marketers across industries to see what areas will grab their greatest attention in the new year, those things that top the list as they sit down to their desks this month.

Asked to name their top three priorities, they most frequently cited "effectively maximizing the marketing budget," "developing a culture that fosters and supports marketing innovation" and "optimizing the structure of my marketing organization for agility/adaptability." Other priorities included "developing a social-media strategy that's right for the brand," "acquiring the best talent to meet our needs" and "testing new marketing innovations (i.e., location-based targeting, interactive TV)."

Not surprisingly, a focus on marketing budget ranked high. "One thing that is slightly different moving into 2011 is that maximizing the budget is about accountability and not just efficiency," said Erin Streeter, senior adviser in Forrester's CMO Group. "Activities that are viewed as expensive or hard to measure, those things are being cut," she said.

David Norton, senior VP-CMO of Caesars Entertainment Corp., for example, said that following a 20% reduction in corporate marketing budget, his organization is looking at the marketing spend more holistically across the enterprise and focusing on emerging channels that are more cost effective.

David Norton
David Norton

Meanwhile, managing marketing innovation -- defined by Forrester as the process of identifying and capitalizing on new-business opportunities -- also topped respondents' list of priorities. "A lot of CMOs are realizing that to keep pace, marketing innovation needs to be more actively managed," Ms. Streeter said.

"They need to be actively encouraging and enabling innovation in the organization, rather than be one step behind consumer behavior, the way media is evolving, and technological changes."

For Randy Drawas, the biggest priority -- and that which he feels defines a successful CMO -- is acquiring the best talent and creating a culture that inspires people to take risks and make change happen.

Randy Drawas
Randy Drawas

"CMO is, in lots of ways, a lonely position," said the VP-marketing of Kaspersky Lab. "You want to be surrounded by people who are all about taking the initiative. And that's really where the greatness comes from. The challenge for a CMO is pretty daunting when you think about how the ground is shifting under our feet," he said.

"Those of us who are in a CMO position probably are traditional marketers," he said. "We've grown up doing the classic things, and the challenge now is, how do you break through and create an environment that is agile and enabling people to take bolder initiatives?"

So where is the internet-security-software marketer looking for these key hires? "We have our own internal-recruiting capabilities, we use outside resources to recruit -- but there's no rocket science behind it. We do get a lot of resumes, but we're in a cycle now where it's getting much, much harder to find good marketing people," he said.

"If you're a good marketer, you're much more in demand than you were two, three years ago. And it's only going to get more intense in 2011."

For Cleveland Clinic's Mr. Matsen, the recession has meant fewer discretionary patients and a rise in uncompensated care. And it's unclear what will be the effects of new people coming into the health-care system with new forms of insurance.

Those challenges put pressure on top-line revenue and on the bottom line, as well, he said. As a result, he has to make his marketing budget work to grow brand awareness and also build a national patient base.

"We need to have people top-of-mind aware of us so that we'll be top in the consideration set. That's what had me put maximizing efficiency at the top of my list. The pressures have increased the need for us to be as efficient and effective as we can."

Enter innovation and an embrace of new marketing technologies. In 2011, the media budget will be evenly split between online and offline media, up from about 40% spent on online media last year. They've also moved a significant amount of money into search-engine marketing, which "lets us track from the click-through on that campaign all the way to someone making an appointment at the clinic," Mr. Matsen said. "We can geographically target those campaigns and we can alter the mix of words we're using so we're really getting to the bull's-eye of our target ."

The marketing team has aggressively moved into social media, including LinkedIn, Facebook and Twitter, through which it has done the equivalent of web chats. "For the first time this year, we've seen social media actually establish a presence as a source of awareness for the clinic."

At the end of last year, mobile was for the first time included in the media plan, and Mr. Matsen said it will expand in 2011. Last year the health-care organization launched its first iPad app and this month will launch its first Droid app.

"For health care and particularly patients who travel for health care, they tend to be highly educated and highly engaged in technology. So they were on the web, they're moving to mobile, and I suspect they'll be moving onto tablets if they haven't already. Our goal is to be there with our prospective patients as they're moving to these new technologies," he said.

"The biggest change I've seen in marketing is the need for speed and adaptation. You need to have a lot of dialogue with your leadership team and then take some risks along the way. The key is to test and learn and keep moving forward. As a CMO, you've got the responsibility organizationally of being on the leading edge of new technology and knowing if it will work for your organization. It's a constant challenge."

None of the respondents included "working effectively with procurement" or "strengthening agency relationships" in their top three priorities for 2011. Why? "Both are definitely important topics, but I think they are just processes that need to happen in the background," Ms. Streeter said. "They don't make the list as 'things I need to focus on,' they're just 'competencies I need to continue to do.'"

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