#MediaSnack Ep. 42: Are 50% Of CMOs Useless In 2016?
On this episode of #MediaSnack we are back to school, after an unusually busy summer for the media industry, we review some of the biggest stories of the last 3 months. This will help catch you up if you've been on the beach. The scale of progress in the global media industry is immense and it's interesting to review what's happened in just the last quarter.
First, we review news that Diageo, the global drinks giant has concluded its hasty media agency review and it's pretty much as you were. Dentsu Aegis retained their most important global client. You might recall on a previous #MediaSnack we were surprised that Diageo had called a review because we regarded them a highly loyal to their long relationship with DA agency Carat. Retaining clients of this scale is as good as a win, this year the media agency pitch market has been significantly slower than the madness of 2015's MediaPalooza so these global pitches are highly contested both in terms of the commercial offer and the agency talent working on them. It's an advantage for advertisers like Diageo and IKEA (also running this year, managed by ID Comms) to pitch their accounts in quieter periods because you get more attention for agencies who are not having to spread their resources and commercial power across multiple big advertisers.
Next, we discuss a fascinating insight from some research in the US which highlights the huge churn still occurring in the CMO role. 50% of major retail advertisers in the US have changed their CMO in the leat year! And over 60% of those found replacements outside their company. This churn seems to indicate a broad dissatisfaction with CMO's likely because the role of a CMO is changed but companies are not able to describe what they need. Our review of the busy summer shows just how broad the CMO's perspective and expertise needs to be nowadays. It's overwhelming, and then you add on top of this the far greater accountability that marketing is subject to in this competitive digital world. CMO's are expected to turn magic in very short periods. We suspect that this is in because of their organisation's dysfunction which makes it very difficult for CMO's to succeed: The company expects them to transform the business but at the same time is not actually empowering CMO's with the influence internally to activate the changes needed. We consider how this impact the Chief Media Officer role, any media executive needs greater tenure because of the specialist technical knowledge which is required. Companies who transition media directors out of their roles risk losing huge value.
Finally, we review some startling evidence found by Gideon Spanier of Campaign in the accounts of the Guardian Media Group. The publisher has made provision in its accounting to pay incentives to media agencies in return for commitments of advertisers budgets. Sometimes this can be in the form of cash rebates. It's another example, following the Daily Mail admitting it puts aside £27m ($40m) each year as rebates to agencies, this amounts to 7% of its total ad revenue. Both examples give welcome transparency into how media agencies can generate income and benefit from committing advertiser spend. This is concerning at a time when Guardian is posting record financial losses and the organisation risks imploding under debt which would be a loss to quality journalism and a loss to the advertising industry. Marketers should welcome the transparency, and we look forward to many more publishers starting to make public their financial arrangements for paying incentives and rebates to media agencies.