CMO's Take Back Marketing?

I’m catching up on my reading this holiday week… unfortunately, I’ve let it pile up, shame on me!

The October 31 issue of Advertising Age has an interesting article in the Opinion Column summarizing a recent speech given by Bob Liodice, President-CEO of the Association of National Advertising.  With an article titled “ANA Chief Calls on CMO’s to Take Back Marketing, but Do They Really Want to?” got my attention.

A top line on the article:

1.  Company sales performance is growing at 2% annually

2.  9 of 10 big brands are losing share

3.  Overworked and under trained marketers

4. CMO’s need to lead – drive business results, etc.

5.  Brand building is waning

6.  Competing financial decisions

A few thoughts…

1.  Big brands might be losing share – competition from overseas competitors, outsourcing to lower costs and lack of innovation are surely some of the specific reasons.  Building the brand is critical but there are other factors which are probably impacting growth.

2.  Medium and smaller brand growth – looking at the big boys is great, however I wonder if the same sales performance issues are impacting those further down the size scale.

3.  Training – yes it’s a huge issue.  Everyone talks about it, but it seems no one actually does it.  It’s not just sending people to courses.  It’s giving them projects beyond their skill sets and mentoring/teaching them to do it.  It’s allowing for failure.

4.  Skill Sets – what use to be the norm is for Marketers to be skilled in all aspects of the marketing trade – PR, brand, media, direct, social, mobile, search, web, advertising, production, creative, strategy, planning, database, writing, etc.  However, today there is so much specialization most Marketers don’t know how the pieces fit together.

5.  Financial Management – this isn’t anything new, so I wonder why it’s all of sudden considered a big issue.  Where to spend or invest marketing dollars varies by each business… but where most get it wrong is that they invest in areas which don’t drive sales, pay for things which really aren’t true marketing expenses and a whole bunch of other areas which I won’t go further into.

6.  Never Outsource Strategy – if you’re not smart enough to develop the foundation of your company’s marketing strategy,  then you shouldn’t have the job.  I’m not saying you shouldn’t work with others to develop the strategy, but outsourcing it to a 3^rd party isn’t wise in any situation.  

7.  If leadership is showing where we need to go then management is about actually getting it done.  And some Marketers don’t have a great track record of late on not only leadership but management as well.  The media rebate scandal, allowing procurement to own agency selection/management, outsourcing strategy to agencies – these are all symptoms of not focusing on block and tackling marketing. 

The ANA’s call for CMO’s to take back marketing?  CMO’s should have never let it go in the first place.

Scott

The rumble in the jungle -- ANA vs. 4A’s

“In this corner… the Association of National Advertisers (ANA) a heavy-weight known for its pummeling attack.  And in the opposite corner the American Association of Advertising Agencies (4A’s) known for quick moves and ability to dodge an opponents attack.”

Media transparency… the issue which has shaken the advertising/media industry this year continues to be a discussion vs. a solution.  But where to go from here?  Is it the 4A’s of ANA’s responsibility to solve the issue?  Or is it the client?  What about the agency?  And how about the media property?

Yes to all of the above.

-       Associations. 

o    The ANA and 4A’s should “attempt” to come up with guidelines for both associations members. 

o    However, I don’t believe it’s possible that they could ever come together with a single guideline document. 

o    Does this take the teeth out of each organization?  Not sure, but time will tell.

-       Clients.           

o    Need to clearly define any financial compensation that the agency receives. This needs to include, but limited to, any cash rebates, discounts, bonus inventory, barter rebate, agency fees, media fees, etc.  

o    Next, clients need to clearly state what happens with those rebates, fees, etc. 

o    Who has to approve all of these compensation opportunities? 

o    It needs to be put in contract language in the Master Services Agreement and applicable across any/all units within a holding company.

o    Get tighter control over tracking of media spend and fees in general.

o    Take a hard look at the compensation model you have setup with your agency – perhaps you need to call off the Procurement Dept. and actually put a bit more money in the agencies pockets. 

o    Consider putting specific contractual language with your main media partners describing your expectations in regards to media rebates, etc.

o    Continuosly audit the agency.

-       Agencies.   

o    Get over it.  You and the clients agreed that a 3^rd party audit was needed.  Now you didn’t agree to agree with the results, but come on, the results are pretty clear.  Just move forward and fix the issues.

o    Speak to your client about your compensation challenges… if the rebates were providing the revenue you needed to meet your financial targets then there’s a bigger issue.  Look most clients actually want you to make money.  But if a client’s procurement department has wacked away all your profit… it’s time to have a serious conversation with the client.

o    Don’t try to get squirm out of the issue with interpretive analysis of legal documents put forth by clients.

o    Be transparent – this is a chance to hit the “reset” button on your client relationships if you work it correctly.

-       Media Properties.  Ahhhh, I didn’t forget about you!  You’re part of the issue as well.

o    Stop playing the victim in these conversations… “I had to do it to get the business.”

o    You need to be transparent with clients on the full compensation picture – rebates, payments, discounts, etc.

o    Make your rate card and prices more transparent.  Break down the costs so clients can understand what they’re paying for. 

o    Stop playing both sides of the fence with the agency and clients.  Stop telling clients how the agency isn’t fair and stop telling the agency the client loved the idea.  You’re feeding the issue.

The Dalai Lama had it right when he said “A lack of transparency results in distrust and a deep sense of insecurity”

See my previous posts on this subject on my Linked page or on my blog.

Scott

My Daddy is Bigger Than Your Daddy

The latest article regarding chest thumping between the AAAA’s and the ANA reminds me of two kids playing on the playground and proclaiming their Daddy is bigger than the others.

The continuing saga of transparency whether media agencies have received financial compensation from media properties has clearly drawn a line between clients and agencies.  Each seems to have taken a strong stance for each organizations constituents.  The AAAA’s issuing transparency guidelines and publicly naming clients and the ANA expressing displeasure  of the client names being released and setting up a confidential reporting hotline.

This entire situation is all about money — plain and simple.  The word transparency is just a substitute for whether agencies or clients receive the proposed media property compensation. 

At this point in the saga, I wonder if any results which come back from the auditors will be accepted by both sides of this issue.  My gut tells me this situation is far from being over…

Scott

Agency Rebate Allegations – “RebateGate”

In the October 20^th issue of Advertising Age, it was reported that the ANA and the AAAA’s have come together to investigate allegations of “agency rebates.” 

Basically, the situation(s) is this:

-          Media agencies purchase media on behalf of multiple clients.

-          Media companies have allegedly provided incentives to agencies for buying more inventory from       them.

-          The agency then received a “rebate” for spending more money with one media-company.

-          Rebates haven’t been passed back to clients but pocketed by the agency.

-          Clients have been kept in the dark for the most part regarding this practice.

This isn’t anything new… it’s been going on for years.  Media audit companies have been pointing it out to clients for a number of years.  And savvy large advertisers have been able to claw those dollars back.

The rebate situation brings up:

1.       Transparency – why haven’t clients been informed of these rebates by media companies and others?

2.       Trust – if the “value” of a media agency is to strategize, plan, measure and frankly buy media at the lowest possible cost for clients… how do I know they’ve been purchasing the right media for my campaigns? 

3.       Motivation – is the agency motivated to meet my needs or thinking about how they can make the rebate?  And, have those fees helped make up the delta for lower costs on media buying fees paid to the agency?

So what to do?

1.       Ask the question of your agency – Are you receiving any rebates from any media partners, vendors etc. for the work you do on behalf of my company?

2.       Hire a media audit company to look at the media and vendor purchases… audit the numbers and report back on rebates and other financial concerns.  Hopefully, a clause such as this is included in your agency contract.

3.       If rebates are found, have the amount calculated by a 3^rd party.

4.       Ask for a rebate check, not media credits or agency fee credits.  A check makes this a clean transaction, getting media or fee credits will just make things more complicated.

5.       Current agency fees – make sure you keep an eye on any additional fees which might start being applied to your bill.  This could be to make up for any media rebates which might be taken way.

6.       Future Negotiations – when you look at negotiating for a new term (or with a new vendor/agency) make sure you understand if fees are going up because rebates might be taken away.

7.       Quarterly Review – if you don’t already do it… start a review to keep this and other potential issues in the windshield vs the rear view mirror.

8.       Provide very clear contractual language on rebates, etc. in your agency contract

9.       Make it known to media companies your input on this situation.  It’s your money the media company gets… so they will listen.  As my Dad would say you need to have a “come to Jesus” conversation with them.

10.   Follow the Money – this is a simple situation to follow who’s getting the cash and why.  Start investigating.  Don’t stop with the agencies … look at media companies as well.

If agencies aren’t transparent with clients… it will eventually come out.  It might take some time…you can run, but you can’t hide.  And if this investigation yields specific names as to company’s potentially involved in the rebate allegation… restoring trust of clients will be tough…and explaining this at pitches is going to be interesting to say the least.

Getting in front of the Marketing community with your cocker spaniel named “Checkers”, getting on TV and saying “I am not a crook” or getting rid of 18 minutes on tape… ain’t gonna work. 

Scott