Welcome to our newsletter for November 07 – January 08

In this issue, we focus on the future role of senior marketers and key trends in online marketing.

Please forward this newsletter on to colleagues and friends who may also find it of interest.

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Dianne Davis
Principal and Managing Director

www.davismarketing.com.au

According to recent analysis by McKinsey & Co, few senior management roles will undergo as much change over the next few years as that of the Chief Marketing Officer ("CMO").

As the proliferation of channels and market segments gather pace, the role of the CMO will need to expand to involve:

• Re-defining the way the marketing function performs core tasks
• The CMO clearly assuming the role of "voice of the customer" within the organisation.

The CMO's changing role

In responding to these changes, organisations must do two things:

1. Articulate an expanded role for the CMO and the marketing function.
   Notably, leading organisation-wide change efforts, playing a more active role in shaping a company’s public profile, and building new capabilities both within and outside the marketing function.
2. Ensure they have the right person as the CMO - to understand how customers are changing, and to develop new marketing capabilities on a whole-of-organisation basis.

Building new marketing capabilities

Within marketing, such capabilities will include:

• Building brands across a diversity of media (including those dominated by user-generated content / social networking)
• Managing an increased number of advertising & PR agencies, and building new skills to create integrated messages
• Increased analytic capabilities (e.g. data management skills to compare and maximise the effectiveness of online & traditional marketing spend).

Many of these skills (e.g. social networking, digital marketing), will require a level of specialisation that complements the more generalist capabilities of traditional marketing managers.

Accordingly, organisations will need to restructure marketing functions by: (a) creating centers of excellence for key marketing capabilities; and (b) outsourcing some marketing activities requiring specialist skills.

How CEOs can help

CMOs are vital to helping organisations meet future customer and marketing challenges. But CEOs must also play an active role - and many CEOs devote too little time to marketing challenges preferring to pass them on to the CMO.

A key reason: the number of CEOs with marketing backgrounds has declined in favour of people from operations or financial backgrounds.

There are three key ways in which CEOs can help CMOs:

• Understand what’s happening with customers.
  
  Find out how different customer segment needs are evolving, who is saying what to your customers on which blog, who are the social influencers of your product, and how are customers changing their approach to decision-making?
• Foster the right linkage between the CMO’s efforts and those of other parts of the organisation.
  
  This linkage is not only critical for bringing together marketing (and related functions like corporate affairs and investor relations) but also important when CMOs are asked to drive major strategy initiatives. Without the right links between the CMO and other business unit heads, the latter tend to view such initiatives as corporate-staff efforts and therefore hand over participation to more junior managers.
  
  As well, it is vital to rotate senior marketers into line roles and have future general managers spend time in marketing. This helps break down barriers and instills a marketing orientation across the whole organisation.
• Act as a “counsel” for the CMO as he/she transforms the role of marketing.
  
  Change management skills, development of specialists and geographic de-centralisation will be required to create the marketing function of the future. CEOs typically have more experience with such organisational change than CMOs and will be extremely valuable counsellors.

A global survey of 400 senior marketers (McKinsey July 2007) revealed the following trends in online marketing:

• Most survey respondents considered online tools were "somewhat important" in five key areas: customer service, sales management, advertising, product development & pricing (however, except for customer service, over 60% of respondents use these tools infrequently).
• Key online channels are: company website (79% of respondents use it for sales management, 86% for customer service), email (78% for customer service) and proprietary e-commerce sites (42% for sales).
• Currently, nearly a third of respondents spend more than 10% of their advertising budgets online (by 2010 this will double to 20%); around 11% say they will spend most of their advertising online.
• The most popular online advertising tools are: email (83% usage), display ads (73%), keyword search (63%), branded sponsorships (48%), referrals (39%), video ads (33%), podcasts (25%) & emerging tools (i.e. blogs, wikis, social networks, online games, virtual worlds).
• Online ad tools most likely to attract increased spending over the next 3 years are: search & video ads. While, display ads and email are the least likely to attract additional spend.
• In terms of usage of online tools in relation to marketing goals:
  • Brand building = branded sponsorships, display ads, video ads, keyword search
  • Brand consideration = video ads, keyword search
  • Direct response = email, keyword search, display ads, referrals
  • Retention = email, podcasts, branded sponsorships, emerging tools.

If you’re at a stage where you want mentoring (to grow in your current role, identify an appropriate new role, contemplate moving out of marketing altogether, or to embark on further personal development) what are the key characteristics you should look for in a mentor:

1. Direct experience in various marketing management roles
2. Industry experience/expertise relevant to your career path
3. Strong awareness of organisational dynamics/politics
4. An appreciation of change management principles and practices (because marketing initiatives are so often change management initiatives)
5. Experience in mentoring other marketing professionals
6. An understanding of how an effective mentoring relationship should operate
7. Someone that engenders trust – both personally and professionally.