the cmo report

Can Marketing Really Be Outsourced to India?

Spring 2010

This Little PiggyWent to Facebook

Brand Globally,Market Locally High and Dry

theCMOreport_r3.indd 1 3/11/10 1:06 PM

Spring 2010

Publisher MarkRedshaw

editor-in-chief JordanaCostello

creative director & editorial director JoshuaRedshaw

art director JolantaKudlaBahena

coPy editor BrianBrown

contributing editor JimBoring

The CMO Report is publishedquarterly by:

The CMO Report485 east half day roadbuffalo grove, il 60089

to subscribe:www.thecmoreport.com

email changes, inquiries, etc. [email protected]

for reprints email:[email protected]

no part of this publication may be reproduced without written consent of the publisher. ©2010, the cMo report. all rights reserved.

2 Spring 2010 The CMO Report

From the PublisherMark Redshaw

Welcome to the first issue of The CMO Report, a publication focused on the issues, priorities and concerns facing the Chief Marketing Officer. The articles you will find in The CMO Report address these subjects within the context of the pressures on the CMO including doing more with less, doing it faster, and doing it better – no small challenges. The CMO Report will provide insight into the major conditions and trends affecting your performance. Articles will look at the effect of new organizational models and the problems and opportunities they present. There will be content relating to enabling technologies that make it easier for local marketing to be effective without wandering outside the umbrella of brand integrity. In short, if it has to do with helping the CMO do it better and faster or it has to do with finding and utilizing resources more efficiently – you will find it in The CMO Report. We welcome your input – the things that keep you up at night are the content of The CMO Report. The CMO Report will hopefully become essential reading for you in your role as Chief Marketing Officer. Our goal is to make the articles objective, relevant and useful. If it has to do with the challenges faced by the CMO, look for both knowledgeable opinion and fact-based research in The CMO Report. Sincerely,

Mark Redshaw,Publisher

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Spring 2010

Publisher MarkRedshaw

editor-in-chief JordanaCostello

creative director & editorial director JoshuaRedshaw

art director JolantaKudlaBahena

coPy editor BrianBrown

contributing editor JimBoring

The CMO Report is publishedquarterly by:

The CMO Report485 east half day roadbuffalo grove, il 60089

to subscribe:www.thecmoreport.com

email changes, inquiries, etc. [email protected]

for reprints email:[email protected]

no part of this publication may be reproduced without written consent of the publisher. ©2010, the cMo report. all rights reserved.

The CMO Report Spring 2010 3

High and Drystuck in the shallows? Losing Ballast is the First stepEconomic conditions are the broadest context within which the CMO operates. In good times the rising tide lifts all boats but when the tide goes out the time allowed to fulfill expectations goes with it. Right now the tide is out. No one doubts that it will return but the boats that it lifts when it does will have different crews unless they have somehow shown extraordinary seamanship.

That seamanship includes skills that once resided in highly qualified marketing support disciplines but which now are nowhere to be found in the shrinking ranks of marketing support staff. They include project management expertise, production knowhow, digital and print media specialties. The CMO must some-how retain the counsel and skills of a long list of specialized marketing supply chain disciplines without increasing headcount or incurring additional costs. The Captain’s Dilemma Depending on the evidence you prefer, the average tenure of a CMO is between 18 and 28 months. Even if we split the difference the average is below 2 years. No matter where you are along that timeline it doesn’t seem like enough time.

What is responsible for this situation and what can a CMO do about it? The most belabored cliché is that we live in a time of great change; that globalization, technology, economic and social conditions all add up to increasing expectations. Those expectations include not only improved products and services but also improvement in the speed and manner in which they are provided. Management expects, reasonably or not, that the CMO will deliver on these expectations.

More than One Way to sail a shipThe predominance of print media has given way to a variety of digital media and channels that increase the ways in which the CMO can reach both established and new markets. But these new opportunities bring with them another set of complications.

First, the skill sets within the print discipline are well established; those within the digital realm are still in the process of definition and classification. Second, it is rare to find expertise that encompasses both digital and print. The danger to the CMO is that a silo mentality will pit these resources against each other. Paradoxically, the time of the generalist may be upon us even as individual specialties become more narrowly defined.

shipshape MarketingTraditional organizational models are giving way to technology-enabled cooperation among various disciplines in remote locations and gathered into teams that address common project or initiative goals. The short walk down the hall to the resident expert has been replaced by an even shorter route – the click of a mouse. Now the CMO has access to resources and channels far more powerful than those of their predecessors. But the CMO must redefine his or her own organizational model and style of interaction in order to use these resources effectively.

The CMO who can adapt to take advantage of these new resources will be able to weather all sorts of economic and market conditions. A safe harbor is no place for a merchant vessel but the dangers of the open market are much less intimidating when the ship is tight, the rigging is taut, and the crew is the best you can find wherever they may be. Such companies can not only provide efficient implementation but, when working as members of their clients’ management teams, reduce costs much more rapidly and continuously than is likely with internal resources.

CMO

When the rising economic tide comes

back in it may float all boats but will

you and your crew still be on the boat?



Turn off the lights,

the party’s over.

Can Marketing Really Be Outsourced to India?The Long HangoverLet’s admit it, Wall Street is not the only place where bloated egos have spawned bloated companies. We are in the midst of one of the most painful hangovers in the history of modern business. Only the recognition that much of it is our own fault will enable us to recover our footing and get back on track. Consider the question posed above – Can Marketing really be outsourced to India? Would that question even be plausible if someone had been watching the store?

We Are the economic CrisisThe economic crisis that has brought budget-slashing, staff reduction and government intervention is not the result of lean, hungry organizations run by managers who maximized the effectiveness of their resources. We allowed ourselves and our companies to grow fat and complacent; that hubris and over-confidence makes moving to India feel like a question we might consider.

We’re not Making Model-Ts AnymoreOne of our most egregious short-comings has been our addiction to an organizational model left over

from the Industrial Revolution. At one point it made sense to gather huge numbers of employees in one place in order to produce products and services. It made sense because communication with these employees and management of their activities was a face-to-face, hands-on activity. But even as technology was changing the ways we could communicate and work, the organizational model still persisted, using vast departments of employees, each huddled over a tiny sliver of specialized work that reduced them to what they called themselves, “cogs in the machine.”

A new Model establishes itselfThe transition away from organizations modeled on the needs of the assembly line, the “bull pen,” or multiple layers of middle management has taken

place in fits and starts. Kevin Kelly (former editor of Wired) wrote his seminal work “Out of Control,” in 1995. The book described an alternative to the multi-layered, top-down hierarchy. Kelly envisioned a model that enabled participants in an ever-expanding network of nodes and lines of communication to work together efficiently and effectively. His model described the way in which work can be done better and be more satisfying when it is freed from obsolete organizational structures and restrictions.

Every new organizational model must compete with existing models to prove itself. For some time outsourcing has been considered a management tool of last resort, used only when internal costs and waste became so burdensome that no other



choice remained. Very gradually it has become apparent that the outsourcing model is much more than a cost-cutting tool.

Outsourcing Brings Us TogetherOutsourcing has become the new model for efficient organization around common business objectives and related functions designed to achieve those objectives.

Technology has made business and functional collaboration between widely separated parties the norm. It is no longer essential to define team members by their employment status. Now the criteria are capability, flexibility, competence, responsiveness and availability. Paradoxically, outsourcing is a means of bringing more control and collaboration to business purposes, not less.

A new Category emergesStaffing internally for every specialty or discipline associated with Marketing is a thing of the past. As the bullpen sinks not so gracefully into the sunset of corporate history the CMO must, willingly or not, find a new way.

Fortunately there is always opportunity in chaos. A new category of management companies has arisen to serve specialized outsourcing needs. These companies are home to the expertise required to plan and implement major marketing initiatives. Every specialty and discipline associated with print or digital communication can be found in one or more of these companies. Because these companies do every day what employees may have done only

intermittently, expertise is able to develop in much greater depth.

Such companies can not only provide efficient implementation but, when working as members of their clients’ management teams, reduce costs much more rapidly and continuously than is likely with internal resources.

Marketing Without WallsMarketing has been an early adopter of the outsourcing model. Many marketing functions – creative services, media buying, and a host of support services related to developing and distributing advertising have been outsourced to agencies. But the agency model has its own evolutionary culs-de-sac; agencies themselves are redefining their role and their organization.

The question for the CMO is not whether a particular resource should be within or outside the company but rather how to qualify, select and manage resources regardless of their place within or outside the company.

When the situation requires us to change or die, change becomes a much easier choice. The time has come to jettison the unresponsive organizational model that is keeping us from realizing the full potential of all our resources wherever they may be. The CMO who leads the way will find both present value and lasting results. CMO



This Little Piggy Went to FacebookOne of a child’s first conscious experiences is about going to market. Clearly no child who ever had their toes counted to the traditional verse, “This little piggy went to market,” had any conception of what the ditty is about, but it is a reminder of how much a part of our lives going to market has always been and how early it begins.

The human brain developed its higher capacities not by displacing older functions but by building physical structures over them. Something of the same sort seems to be true of our “going to market” impulses.

To Market to MarketGoing to market has always been an adventure – anything could happen on the way, there was a sense of excitement in meeting new people, seeing new things; the market was a place where possibilities were endless. Each generation built on the “going to market” tradition of the last. The common thread across all cultures and nations was the marketplace. Whether it took the form of a street fair, a farmers’ market, or America’s Mall, the essence of the experience remained the same – new products, new people, fresh surroundings, social interaction and the sense of possibility.

To Buy a Fat PigThe market itself is a living organism, formed of individuals who each add their own unique preferences and personality to create the market experience. The social media phenomenon is the latest layer of the “going to market” experience. Social media recapture the individualistic spirit of adventure, friendship, and commerce as a community that goes back to the very origins of the marketplace. In a way the crowds of strangers at the mall are less real than

the “faceless” individuals interacting in a virtual marketplace.

We Aren’t in Kansas Anymore, TotoIn the digital world “place” no longer refers to the mall, or St. Ives, or Scarborough Fair. A virtual place is, nonetheless, a real, vital and engaging market of ideas, preferences and opinion. And just as in the raucous, friendly street fairs of old, the vendor

and the buyer must talk to each other in a candid, conversational manner not in the stilted mannerisms of a great corporation talking to the humble, passive customer.

Other obstacles face companies trying to take advantage of freely organized virtual communities of customers. This is especially true of companies with a long history of carefully protecting brand identity from unauthorized encroachment. The corporate culture, stylebook, public relations and legal counsel all present a side of a company or brand that is often incompatible with a community of peers talking conversationally.

Etiquette and effective involvement within such a community require thinking more carefully about how to participate than on crafting an image.

The advice applies equally well to the CMO charged with protecting

the brand and all its associations. Conversations occur within virtual communities that force the CMO to bite his or her tongue. The benefit of doing so may be greater than speaking out defensively – the more effective defense is from those with no vested interest who freely voice their support and admiration for the company. Products and PromisesThe same restraint applies to the impulse to sell something. In the virtual marketplace customers sell the company’s products and enhance the company’s reputation. The CMO is responsible for providing relevant information, creating a way to easily order, and delivering on the brand or company’s promises. That includes not only the promises of the company’s products or services but also the promises associated with the values of the company. Products and lifestyles have become inextricably entwined and the virtual community reinforces this conjunction.

This is not to say that many of the traditional means of advertising or marketing no longer apply, only that their more aggressive impulses need to be either checked or more carefully considered before they are applied in the virtual world.

The CMO as Chief JugglerThe juggling act required of the CMO is formidable; each ball must be tossed and caught individually but all the balls in the air together must present a seamless whole to every audience. Thus the CMO must both compartmentalize and integrate every aspect of marketing. Still, the juggler was the main attraction at every fair from Scarborough to Ludlow. The more things change, the more they remain the same.

CMO


11 Peeps and Orgs We Follow on Twitter (and So Should You)

1 WSJ 2 Starbucks* 3 JetBlue** 4 ESPn*** 5 Hashtags 6 GuyKawasaki 7 MarketingProfs 8 Mint 9 Freakonomics10 MktplaceRadio11 HarvardBiz

*We need our coffee too

**And sometimes to plan a well earned vacation

***Don’t worry…we won’t tell



Follow us on Twitter – twitter.com/PSAInsights

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Brand Globally, Market LocallyPrint, television, point of sale and online – it is hard enough for even the most talent-laden marketing department to keep them all truly integrated for corporate branding campaigns. That difficulty becomes nearly insurmountable when campaign implementation is at the franchisee or agent level. When centralized control of the message is lost, rogue marketing campaigns can do more than just flop. They can damage brand equity.

The last five years have changed the way that we interact and digest information. Not only is consumer buying behavior changing, be-coming more unpredictable, but it is influencing those who are in the trenches of distributed networks. Franchisees, agents and dealers are increasingly trying to influence customer decisions through email, social media and home-grown direct mail campaigns – sometimes with disastrous effects. In October, National Public Radio’s business program, Marketplace, featured a piece on how Facebook devotees were creating fan pages for dozens of brands. But your fan-on-the-street isn’t the only one.

A few savvy Chief Marketers realized a while back that this trend wasn’t going to end anytime soon, so it was best to get on board before the train left the station. They realized that by providing an outlet for their people’s creative forces they could both empower their local stakeholders’ efforts and protect their brands at the same time. Through a variety of web-based marketing platforms companies like Mini USA, Chevron, DirectTV and T-Mobile are letting their dealers, franchisees and corporate locations build and

execute integrated campaigns across dozens of media.

integrate Globally, implement LocallyA study done by the Advertising and Marketing Roundtable demonstrated that campaigns that maintain a consistent feel and work together to drive across multiple channels created an increase in awareness of over 51%. This kind of lift means that a Chief Marketer

with a tight budget can reduce a $10 million budget by $3 million without losing effectiveness if the integration is executed well. In addition to the financial upside, this kind of a strategy also results in a sort of brand harmony when applied at the local level in concert with a broader strategy. In fact, when dealers, franchisees and corporate locations are given access to customizable, co-branding opportunities that they are able to implement from web-based marketing platforms, the drop in

the number of rogue campaigns is significant. The combination of collaboration and control generates the best of local and centralized marketing efforts.

Recent economic turmoil has destroyed operating budgets and only magnified the importance of finding ways to attract qualified customers. For many franchisees, dealers and agents, this can add up to tough choices and represents an opportunity for ‘corporate’ to be the hero while building their brand in a down economy. By taking advantage of these web-based marketing platforms Marketing can give their networks access to economies of scale within creative, production and placement realms - something that would otherwise be unattainable at the local level. By providing pre-approved offers and creative, these networks are able to look at their own budgets and markets when making choices about the type of campaign to execute – all while staying within the boundaries of brand standards.

Local Control, Global effectFranchisees, dealers and agents want to get in the action of communicating with their customers and given their entrepreneurial spirit they likely will – with or without you. Your job is to make sure you give them a cost effective outlet for that desire and insulate your brand in the meantime. No matter what your data says, they are always going to feel like they know their market better than you. Now you just have to help them think that the marketing campaign they just executed was their idea.

CMO

The Good, The Bad and the Ugly

in 2009, a chicago based loan officer for a top five financial institution decided to try his hand at drumming up some new business by designing and mailing his own flyer complete with spelling errors, omission of legal disclaimer copy and an offer that no longer existed. thousands of people received the letter exposing the bank to significant liability and a nice knock to their brand.


Budgets Downstakes are HigherTime’s Running Out

Here at PsA, we understand that, for many, the game has changed. for nearly 20 years we have helped some of the nation’s largest firms improve the efficiencies in the Marketing supply chain by aggregating their spend, improving their procurement processes and providing flexible sourcing support in good economies and bad. Why not turn to a true and tested partner in Marketing supply chain Management. The game has changed, but not for us.

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Call 847-478-6000 or visit www.psa.com to learn more.


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