The Marketers
(The Sky is Falling... Part Four)

• Bigger has become better, at least when it comes to flexing muscles to gain a price advantage. The Wal-Marts and the P&Gs of the world dictate consumption patterns and pricing strategies. To become stronger and maintain profit levels, they have only one goal: cut costs.
• Global economies and new technologies have played a major role in helping them cut costs measurably, especially the cost of raw materials and production costs.
• The pressure to further cut costs has necessitated seeking lower costs at all levels, including marketing.
• The effect this has on the advertising industry is a major contributor leading to the current state of advertising agencies and the services they provide.
• Marketers have always believed that advertising agencies are over compensated. The move to abolish the 15% commission system (and mark-ups on production and other costs) started in the early seventies, signaling the start of national agencies becoming less than full-service agencies. "Above-the-line" and "below-the line" agencies were born.
• Today, marketers want a return on investment (ROI) on all marketing and advertising expenditures. The Association of National Advertisers (ANA) task force is looking at various metrics for standardizing media effectiveness, the latest being "engagement." While this may be a good idea, it is being applied to the wrong discipline. Everyone is groping.
• Nearly 200 brands are introduced everyday. Many of them die instantaneously. Others a more painful death. Over the years, many global brands have died due to myriad reasons. Some have been replaced, while others have no place in today's market.
• Marketers expect their new brands to become instant winners. And, advertising agencies are expected to deliver this goal.

Contrary to beliefs, the concept of branding and branding strategies is a relatively new science. Marketing and advertising textbooks in the late sixties and early seventies had just a few pages devoted to this subject matter that has become today's imperative. Today, there are hundreds of books on this subject.

Over the last ten years, a new industry has spawned: Brand and Branding Consultants. Prior to that they were essentially graphic design studios developing visual identities for brands. Today, they provide many services including consumer and brand research, competitive analysis, market segmentation, market trends, supply chain analysis, and new product development. The best of these companies are certainly a threat to advertising agencies. However, as of now, they have not entered the arena of brand communications and brand stewardship.

The dotcoms of the nineties gave birth to a new position at the client level: the Chief Marketing Officer (CMO). For some companies, this position has been a boon; but for most, at least in our opinion, a bane. A 2005 survey of the top 100 brand companies showed:

• The average tenure of for CMOs was 29.9 months.
• The average tenure for CEOs was 53.9 months.
• Only 14% of CMOs have been with their present companies for more than three years.
• Nearly 50% of CMOs are within 12 months of being on the job.

The need for "instant results" is reflected by this and also by the constant changes in strategies; and, therefore, changing advertising agencies. The CMO at Best Buy left the company just a few days ago, after nearly 48 months at the job -- the duration close to being a record. Best Buy will be looking for a new advertising agency very soon. That is our belief.

So what are CMOs looking for? Their top three priorities:

• Drive revenue growth (46%)
• Acquire, satisfy and retain customers (36%)
• Align marketing function with business strategy (35%)
• We find it interesting that the "customer" is not the top priority!

In order to try and attain their vision and goals, marketers are using the services of various entities:

• Above -the-line advertising agencies.
• Below-the-line advertising agencies.
• Ethnic agencies.
• Media agencies.
• Internet agencies.
• PR agencies.
• Brand consultants. Other consultants.
• Consumer research companies.

Additionally they are also reaching out to the media and looking for them to provide solutions, with their lead agency having little or no role at all to play in the development of communications. Specialized content is designed and developed to suit the perceived specific needs of a brand rather than relying on the agency that acts as their brand steward.

There certainly is a sense of frustration and despair, both latent and exhibited.

This frustration is also reflected in some of their other activities. They are going off their roster agencies to hand pick the best ideas. Companies like P&G are accepting advertising on their own branded web sites (crest.com for example.) A few marketers are establishing internal planning departments. Some marketers are asking the losing agencies to "surrender" all ideas made at a pitch. Some are even asking the selected agency to "raid" specific personnel from the agencies not selected!

All in search of the Holy Grail...

The "Four Ps of Marketing" are being questioned. In fact, Phillip Kotler suggests they be replaced by the "Four Cs."

• Product = Customer Value
• Price = Customer Costs
• Place = Customer Convenience
• Promotion = Customer Communication

We believe this is a good idea and welcome the change. Putting the customer (what a novel idea) first!

However, we would change the word "customer" to "consumer."

The marketers may still find their Holy Grail -- it has been in front of them always: The Consumer!