Thoughts 03.10.19

Why the CMO exodus is a warning shot to agencies

Written by Marc Nohr, CEO

Who’d want to be a CMO in the current climate? Most CMOs last barely 18 months in the role. The turnover rate outpaces any other c-suite position by a country mile. Some 80 per cent of chief executives surveyed last year expressed ‘unhappiness’ with their senior marketers.

It would seem some CMOs are losing their jobs because they are focusing on the wrong things. As Mark Ritson commented last week “Talking crap about Instagram and millennials might get you to the top of the marketing ladder, but once you get to the big room on the top floor these superficial, tactical robes are quickly ripped away to reveal the naked impostor beneath”.

In my twenty-five years in the industry I’ve seen agencies focusing on the wrong things, too. We can be guilty of our own type of parochialism, rather than focusing on the business outcomes of our clients. We can overestimate just how central we are to our clients’ businesses, expecting a seat at the top table without warrant. But why?

Ask C-suite execs what sorts of conversations take place in a boardroom and you’ll hear the same things: profit and loss, growth, productivity, commercial performance. We kid ourselves if we think that boards concern themselves with the creative merits of a campaign or how many awards it could win. They just want to see marketing investment increase market share, minimise defection or drive the numbers in some meaningful way. In short, what we produce is secondary to the commercial value we create. We need to think more about creating value than creating the next ad. That’s not about somehow playing down our creative contribution – it’s about recognising the transformative effect we can have on business success, dialling up the commercial impact of our work and knowing how to charge for it.

At the IPA Commercial Leadership Group we do a lot of thinking on this topic: how do we ensure that we walk and talk in terms which relate to the growth agenda of our clients? We launched the whitepaper The Price of Success at the at the IPA Business Growth Conference in July. It explores how agencies can bill based on the value we create, better reflecting what we deliver to clients. It’s a response to the set of services we deliver becoming increasingly complex and commoditised, making it less credible to bill based on time or inputs.

All agencies need to have an eye on how they better match pricing structures to the needs of their clients. Being clear on how you define and price the value you create is essential, something that should be communicated and understood throughout the entire business. We need to be singing from the same hymn sheet in an agency-client chorus, aligning our shared interests to produce the best outcome for all. The quality of our output is measured by the value it delivers to the client. And there’s the thematic link to the reported exodus of CMOs. If agencies or their clients aren’t seen as delivering commercial growth or value, then we deserve to fail.

Pop over to management consultancy world, which has become increasingly acquisitive in our market, and you’ll see what I mean. What they might lack in visual prowess, creative nous or artistic flair, they make up for in commercial acumen, straight-talking, and linkage to the bottom line. The defenestration of CMOs should be a warning shot to agencies. As CMOs struggle to justify their seats around the board table, and purse strings tighten, who’s to say agencies are not next?


This article first featured on the IPA website.


Read more from Marc here.