ANA Marketing Musings

The Final Pillar: The Marketing Organization

We have now reached the final pillar in the reinventing marketing series. I have discussed the importance of brand building, integrated marketing communications and marketing accountability in my previous posts.

In addition to those critical elements, einventing the total communications process also requires a reinvented marketing organization – one that provides true strategic leadership, consumer centricity and process efficiency. It’s an organization that makes every facet of marketing -- work brilliantly -- in service of the business’ overarching goals.

There are four critical dimensions to reinventing the marketing organization:

• Goal alignment
• Internal partnerships
• External resources
• The marketing professional

1. Goal Alignment

Businesses utilize their marketing function in different ways, for different purposes. It’s critically important that the marketing organization – and the chief marketing officer – be in alignment with the business goals of the enterprise as viewed by the CEO and the key line managers.

In most cases, they’re not, according to a study the ANA and Booz Allen completed in 2004. That study compared CEO priorities with chief marketing officer priorities.   

The CEO priorities were top line growth … speed, flexibility and adaptability to change … and customer loyalty and retention. In contrast, CMOs were most focused on branding guidelines … counseling divisions … and sharing best practices.  That’s a stark misalignment, don’t you think?

It’s vitally important that the CMO and marketing organization understand their mission and be aligned with the goals of top management.   In conjunction with the ANA, Booz Allen has identified a spectrum of six different roles that marketing can fulfill within a business.  They include:

• At the highest level, marketers can be Growth Champions – Here marketing is literally responsible for driving the company’s priorities – leading the development of its brands, products and new businesses.

• Next, marketers can be Senior Counselors – In this case, marketing serves as the primary advisor on marketing strategy to the CEO and individual businesses and leads major advertising, promotion and public relations campaigns.

• Another role is for marketers to be the corporate Brand Builders – Here the function provides marketing services – from communications strategy to creative output and campaign execution in support of the company’s key brands.

• Of course, we can be the Marketing Masters – In these organizations, marketing develops and leads large enterprise-wide marketing efforts and helps set the company’s priorities.

• In some instances, marketing serves as Best Practices Advisors – working with individual businesses to maximize marketing effectiveness and efficiency by bringing best practices to advertising, promotion, public relations and other activities.

• Finally, marketers can fulfill a Service Provider function – In this situation, marketing provides advertising, promotion and public relations services at the request of the company’s brand and product teams.

Booz Allen has created a helpful web-based tool (marketingprofiler.com) that enables marketers to identify where their function falls on this continuum and then take steps to increase the effectiveness of their current role – or migrate to a higher impact one.

Understanding exactly how the marketing function fits into the overall organizational structure as well as how its purpose is viewed by the CEO and other senior executives is essential.  In fact, Booz Allen recommends that the CMO and CEO create a “contract” that specifically sets forth the roles and expectations for success.

2. Internal partnerships 

In many companies, marketing has become disconnected from – and worse, adversarial with – other organizational functions, like finance, the supply chain and sales.

Marketers need to reach out and form strong partnerships with these departments – listening to them, educating them and accommodating their needs and goals.  Wachovia has done this extremely well.  As part of their five-year marketing reinvention process, they created what they call “an uncommon partnership of Marketing, Analytics and Finance” – a partnership that has transformed the company as a whole and focused upper management on “asking the right questions” about marketing and its role within the enterprise.   

3. External Resources

Externally, the marketing organization also needs to develop a new type of partnership with its outside agency resources.  Foremost, marketers should never cede responsibility for their programs to agencies or outside consultants.  Doing so is inappropriate – even irresponsible – in the reinvented marketing organization.  It risks being held hostage by an outside entity that – even in the best of circumstances – has different business priorities.

Marketers must control, drive and integrate the marketing process themselves…internally.  They must be the masters of marketing – or as the brilliant marketing consultant Peter Sealey puts it – the maestros of marketing.

To help fuel a constant flow of new ideas and approaches, the new marketing organization should have its own “R&D laboratory” with separate funding expressly for the purpose of exploring innovative marketing approaches. 

American Express has just such a function – a group dedicated to creating proprietary, consumer-relevant content with the charter of being completely platform-neutral.  It also has another group, the focus of which is to develop ideas that help extract as much value as possible from the company’s entertainment and media partnerships.

The result?  A continuous stream of innovative marketing approaches – as exemplified by a Jerry Seinfeld webisode … an Annie Liebovitz exhibit … a Martin Scorcese short film on reopening the Statue of Liberty to the public …and the Tribeca Film Festival. 

4. The Marketing Professional

Finally, reinventing marketing means rethinking what we require of a marketing professional.  The ANA published a wonderful article in a recent issue of The Advertiser, called “The World According to Jim.”  It’s an insightful interview with three great chief marketing officers and ANA board members – Ernst & Young’s Jim Speros, P&G’s Jim Stengel and Wachovia’s Jim Garrity.   Among other things, these gentlemen reflected on the characteristics they look for in the new marketing professional.  Here are a few:

Holistic, ‘system-thinkers’… customer-centric believers … innovators and dreamers … smart, effective communicators … results-obsessed managers… enlightened measurers … and great team leaders.

In a nutshell, the three Jims are describing the ‘renaissance marketers’ who will truly reinvent the discipline of marketing and lead it to a bright future.  They are the people, who will build the pillars of a new marketing profession.

Marketing Accountability - 3rd Pillar in Reinventing Marketing

If there is an area ripe for continuous reinvention, it’s marketing accountability – the 3rd core pillar (The 1st pillar I discussed was brand building and the 2nd was integrated marketing communications) in the reinventing marketing process.

Marketing accountability has been a major ANA theme over the past three years.  It’s the number one issue, according to a survey we conducted of senior marketers last year.  And with good reason! 

Marketers are challenged in their ability to predict the success of their own efforts.   They know that marketing as a business function often does not enjoy the trust of the organization or its executive leaders.  Why?  Because for untold years, we have been using surrogate and soft measurements like awareness, instead of relevant measurements, like incremental sales impact and changes to brand equity.

But the key is not just measuring the effectiveness of programs and then reporting those numbers to upper management.  The key is to use those metrics for true “decision-based management.”

Surprisingly, few organizations are doing this right. We know there is no silver bullet and chances are that no great epiphany will solve everyone’s accountability challenge. Regardless, technology has empowered a handful of marketers who have integrated processes and people to continuously reinvent the way they look at marketing accountability. 

There are three core platforms that will lead to enhanced accountability. They include:

1. Apply supply chain management thinking to achieve process excellence.

Toyota, which has embraced Kaizen for 80 years, applied this philosophy to manage its marketing communications efforts.  The result was a reduction of creative teams needed per brief, a decrease in agency rework and an improvement in media buying that generated a 25 percent saving in dollars – money re-invested in incremental marketing activities.

At Johnson & Johnson, marketers wove Six Sigma principles into its core processes in ways that enabled the company to increase organizational speed and to generate breakthrough sales results at lower cost.

2. Leverage analytics as an asset.

Companies that value analytics are succeeding at accountability. They approach marketing metrics and accountability in a cross-functional way, involving many stakeholders, particularly those that focus on branding, marketing impact on sales and customer value.

3. Create a culture of accountability.

Creating this culture starts with the appointment of an accountability champion, a person who drives multiple business proficiencies – analytical and financial – towards the common goal of better marketing performance.  Among these proficiencies are:

• Decision rights that clearly define who makes decisions, how people get to contribute to the decision making process and where individual authority rests.
• Motivational incentives – financial and non financial – that encourage people to care about the things that matter.
• The way the organization is designed, the layers of hierarchy and the spans of control held by individuals within the layers.
• Process and information flow that facilitate knowledge-sharing and ensure that expectations and performance metrics are continually communicated to the people who need to know them.

P&G is one of those companies delivering marketing accountability through a combination of the right tools, the right processes and the right culture. It all rests on a marketing mix modeling platform that represents a long-term, global commitment to marketing accountability that permeates through the entire organization.

The responsibility for marketing accountability is far broader. It extends to all industry players and partners throughout the marketing business system. We can’t forget about the other constituencies that must actively engage in the accountability reinvention process:

• Traditional media, in particular, must give us better tools to understand the effectiveness of ad placements. We need to move well beyond circulation numbers and commercial ratings. What we need to know is – does the media work? And how do we prove that it does.
• Agencies need to demonstrate their accountability in the process as well –by understanding the impact of creative development, media management and the productivity in the execution of the advertising.
• Vendors like Nielsen and the Audit Bureau of Circulation need to play an increasing role in the measurement processes to insure total understanding of the productivity of integrated media placements.

Integrated Marketing Communications – 2nd Pillar in Reinventing Marketing

As I mentioned in my previous posts, continuous marketing reinvention contains four key pillars. Last week I discussed brand building – this week I will focus my post on integrated marketing communications.

I believe the most fundamental changes in marketing have been influenced by the development of new media which have shifted power from the marketer to the consumer.

These profound shifts have created enormous opportunities -- but have also complicated the lives and practices of marketers. The opportunities are embedded in the enhanced ability for marketers to connect with consumers directly – and, in many instances, on a one-to-one basis. The ability to target audiences provides enormous advantages in focus, marketing efficiency, research, and marketing effectiveness.

Additionally, by leveraging a broader swatch of marketing communications vehicles, marketers can reach targeted consumers in places and locations not previously possible.

However, marketers’ frustrations and concerns emanate from the challenge of effectively integrating this wide body of communications vehicles. Specifically:

• What is the right marketing mix to support brand building efforts?

• How much should be invested for the total brand and by media type? How does this get recalibrated over time?

• How do companies tie the marketing messages together across the marketing spectrum?

• What are the core measurements?

• What is the effectiveness of each medium individually and how does the media mix get evaluated in total?

A reinvented marketing model is necessary -- and must embrace two fundamental principles:

1. The first is that marketers must approach marketing disciplines and media choices in a completely agnostic fashion. There can be no bias towards television over other media – or for that matter towards advertising over other communications disciplines.

2. The second principle is that marketers must approach the entire spectrum of marketing choices – including the new, emerging ones – with a far more disciplined strategic planning process.

Today, leading companies are beginning to employ sophisticated analytics as a way to more precisely plan and track the performance of their marketing initiatives and ensure integration. Not unlike designing a financial portfolio, they are building a marketing mix model that allocates weights to different marketing investments, then tracks and adjusts those investments based on performance against predetermined metrics.

This approach brings a much needed degree of discipline to marketing planning and execution. And it recognizes that campaigns need to be constantly monitored and ‘rebalanced’ based on performance.

So who really “gets” what integrated marketing communications is all about?

One company that does is Daimler-Chrysler. They’ve recognized that the traditional demographic approach to marketing planning is outmoded in today’s fragmented marketplace. So they’ve transitioned to a lifestyle approach – deeply integrating their brands into the popular culture through a breathtaking array of experiences: sports, fashion, entertainment, music, technology … and an equally breathtaking array of innovative channels: video-on-demand, event marketing, gaming, IPTV, text messaging, pod casting and webisodes, not to mention sweepstakes and public relations.

This highly integrated and diverse approach recognizes the fundamental change in consumer behavior from yesteryear – namely that people aren’t passively sitting at home watching their TVs. Rather, they’re actively engaged in and controlling their media experiences. To connect with these consumers, Daimler-Chrysler’s lifestyle strategy is seeking them out, wherever their heads and hearts might be.

Brand Building – 1st Step to Reinventing Marketing

While brand building has long been the mantra of marketers, the fundamental meaning of this term has radically changed. No longer are soft measures like ‘brand awareness,’ ‘brand preference’ and ‘intention to buy’ acceptable. Brand building from the CEO’s perspective is about business building – generating higher revenues and profits, which in turn will lead to greater shareholder value.

To achieve these lofty goals, brands not only need to be built, they must also be continuously reinvented to remain relevant to ever-changing consumer needs and desires.

Brand reinvention begins with innovation. Innovation that continuously refreshes the brand in ways that speak to consumers one-to-one and build long-term appeal and trust.

The iPod is an amazing example of innovation. It has totally reinvented the way music is acquired, played and enjoyed. In fact, industry analysts are now talking about the “halo” effect of the iPod. They’re predicting that continued sales of iPods to Windows PC owners will eventually translate into increased Mac sales. And they’re beginning to see a steady stream of first-time Mac buyers at the Apple retail stores. That’s the power of innovation to build brands and business!

Of course, innovation not only drives new brand introductions - it also drives the reinvention of existing brands. Here’s a fabulous example:

Motorola has engineered a remarkable business turnaround by reinventing its brand and approach to marketing. In the early 90’s, Motorola owned 46 percent of the mobile handset market. But that leadership dramatically eroded against strong competitors like Nokia. By 2001, the company’s share had plummeted to just 14.5 percent.

New CEO Ed Zander and CMO Geoffrey Frost – who sadly died last year – led a remarkable reinvention of the Motorola brand – driven by off-the-chart innovation.

Positioning Motorola as “wickedly cool and compelling,” they made a highly focused, strategic investment in a new kind of marketing. Among their steps was to permeate the micro-culture of trend-setting Hollywood. They established a Motorola office in Tinseltown and courted the “alpha techno-geeks” who love to have the latest, greatest gadgets.

Motorola products subsequently began appearing in films and TV shows – not as the result of paid product placement, but because the brand had penetrated the living, breathing celebrity community. Of course, marketing fabulously innovative products – like the amazing RAZR – was the foundation of the strategy. And the buzz built fast.

Now you might think that this kind of innovation only applies to consumer products. Not true - just ask the marketers at General Electric.

Although GE markets consumer products like light bulbs and home appliances, the lion’s share of its revenues come from business products and services like jet engines, plastics, power generation and medical equipment. For decades, the company’s brand identify was tied to its “We bring good things to life” tagline – a remarkably durable slogan for a difficult-to-describe conglomerate.

But CEO, Jeffrey Immelt, and chief marketing officer, Beth Comstock, recognized that the GE brand needed reinvention for the future. At General Electric, marketers and marketing were charged with a most unusual and dynamic objective – to change the direction of the company. Mr. Immelt wanted marketing and business strategies interwoven to optimize synergy and productivity. And they did just that with the spectacularly successful platform of “Imagination at Work.”

More than just a tagline, Imagination at Work is a promise to the marketplace and an internal cultural commitment to drive organic growth through innovation. In typical GE style, the company supported its new theme with rigorous training programs and a new enterprise-wide process that challenged managers to develop five new ideas, each with the potential to grow revenue by $50-100 million.

Today, some 80 growth projects are now “in plan” and being funded. These efforts encompass technology innovation, product commercialization, growth expansion and value creation.

It’s not easy for a mega-company to grow year-over-year. But GE is consistently doing just that. Its 2004 revenues rose nearly 14 percent over 2003 – that’s over $18 billion of growth in one year! Brand reinvention driven by continuous innovation is surely a key reason why!