Agencies Hiring CMOs to Fill a Strategic Role

Move Comes as Shops Need to Focus More Than Ever on Their Own Brands

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Blink-and-you'll-miss-it tenure, return-on-investment pressure, new-media chaos -- the woes of chief marketing officers are all too familiar. But that isn't stopping ad agencies -- from national shops such as DraftFCB to little Los Angeles indie G&M Plumbing -- from adding the title to their ranks. Even media shops are adding the post. Scott Neslund, CEO of MindShare, North America, last year hired the agency's first CMO, David Adelman, former media director for Johnson & Johnson's Global Marketing Group, because he recognized that the media business had come of age and that agencies needed to differentiate themselves. "With over 1,000 employees, he can help communicate what our vision is," Mr. Neslund said.

Agency CMOs are not new, of course. In the late 1990s, Laurie Coots at TBWA/Chiat/Day and Mark Goldstein, vice chairman-CMO at BBDO North America, who was then at Fallon, became the first agency CMOs. What is new is the pace at which agencies are hiring them.

Historically, agency CMOs were thought to be little more than glorified new-business executives. In salary negotiations with new-business executives demanding high compensation, the title is often thrown in, said Elizabeth Zea, partner at Gilbert and Co., a New York executive-recruiting firm.

Legitimizing the job
But that perspective is starting to shift as more and more agencies are legitimizing the CMO post as something more. Agencies "need people that can engage the client on their marketing issues, talk about that intelligently and then bring the right resources within the agency or the holding company to bear against that opportunity," said Mitch Caplan, who has two agency titles -- CMO, Young & Rubicam Advertising and Y&R Brands, as well as an interim title, WPP Dell global transitional CEO heading the agency code-named DaVinci, which is handling the newly won $4.5 billion global Dell marketing account. "It's become a more strategic job than functional job," he said.

New-business consultants say that in some cases, having a CMO gives an agency a leg up in presentations. And Joanne Davis, president of New York-based Joanne Davis Consulting, said the best agency CMOs were once company CMOs.

There's also some pragmatic value to having a CMO, particularly if a marketer conducting a review wants in the room only people who will be working on the business.

One for all?
The emerging role comes at a time when agencies need to focus more than ever on their own brands. Even the industry itself could use a CMO, said Russel Wohlwerth, principal at agency-review consultancy Arc Advisers, Culver City, Calif. "Agencies are not well differentiated from each other," he said.

Many new-business executives, with or without the CMO title, also don't do a good job of presenting their agencies to prospective marketing clients and could use more CMO-like skills, Mr. Wohlwerth said.

Undoubtedly this new round of agency CMOs is relatively untested. "I'm not sure the title is well-understood and accepted," said Wendy Lurrie, newly named CMO, DraftFCB.

Still, some agencies are resistant to hiring someone with the lofty C-suite title. "The CMO of an agency, by definition, should be and has to be the agency CEO," said one senior new-business executive at an international agency that no longer has a CMO among its ranks. Agencies are service organizations, so all personnel should directly support the marketers' needs, he said, posing the question: "What value is [the agency CMO job] to the client?"

Actions speak louder
To prove the point, some of the most successful agencies on the new-business front don't have an agency CMO on the payroll. Robert Riccardi, partner at Goodby, Silverstein & Partners, said Jeff Goodby is the agency's "de facto CMO," but at the end of the day, he said, the agency believes its work is the best brand ambassador.

"Agency CMOs are born and not made," said John Geoghegan, executive search consultant, Bialla and Associates, Sausalito, Calif.
How Agency and Company CMOs Differ

The Agency CMO The Marketer CMO
Job is more conceptually driven with abstract concepts and high-level selling Job is more numerically driven
Annual salary usually less than $150,000 a year, but as high as $250,000 to $300,000 for a headquarters agency, with incentives tied to a negotiated percentage, usually 1% to 9% of the business brought in the first year for one time At large companies salary is $400,000 to $500,000 plus an almost guaranteed bonus and significant stock options
Sends out lots of holiday gifts Gets lots of holiday gifts
Takes people out to lunch Gets taken out to lunch
Source: Bialla & Associates, Advertising Age
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