The final day of the conference closed with a focus on the challenges shared by the CFO and the CMO, courtesy of IBM, the challenges of managing global marketing services and the on-going challenges of agency remuneration, or as the Americans insist on saying compensation.
The challenges of the CFO and the CMO
Ron Kline @rfk5 from IBM shared the findings of their recent 2011 IBM Global CMO Study, which I had seen several times before. More interesting was the paralells he pulled from the 2010 IBM Global CFO study.
Both CMO and CFO are taking a broader role in enterprise. The CFO is increasingly advising on all aspects of the business strategy and yet increasing feels under equipped in this role. Likewise the CMO is dealing with the broader remit caused by technology and the increasing channels, the fragmentation of audiences and the pressure for marketing accountability and ROI.
Both also suffer from the fact that organisations appear to rarely invest in the technology to provide up to date, real time data and analytics, with both in most cases relying on manual processes to provide this information. Clearly a huge insight for a technology solutions provider like IBM.
But from the CMO perspective, they are looking to answer this challenge by looking externally for help and assistance in addressing this shortfall. They just need to convince the CFO that the cost is justified and here enters procurement.
The challenges of managing global marketing services
But he made the point that in the increasingly diverse and complex marketing environment, with multiple cultural and political agendas, multiplying media channels, increased levels of governance and accountability it is important to ensure that the quality and professionalism of the consultant matches or exceeds the relationships and transactions they are assessing.
He pointed out the low cost of entry for category consultants and the lack of rigour and structure in their methodology. Some consultants are known to use the agency’s own data as benchmarks back against the agency or to share the data of one client / agency relationship with many different clients.
The challenges of agency remuneration
David Beals presented the ANA Agency Compensation Survey which he has been associated with for many years, but last year it looked at Global arrangements for the first time and looked for differences and similarities with US practice.
The findings were that mostly the world was following a generally US centric approach with fee based payments, but that in some countries outside the US, like India, Japan etc there was a higher incidence of a combination of commission and fee.
One highlight was the fact that in 2 years the level of Value Based Compensation had risen from 0% to 4% showing the growing start of a trend in this area.
The discussion moved to to the general failure of performance based remuneration PBR and the fact that only 3% of Agency Holding Company revenue was composed on performance based payments. The general consensus being that PBR is largely used as a stick to reduce agency fees, rather than a carrot and so was no incentive at all when used this way.
The ANA Marketing Financial Management Conference is a great annual opportunity to spend 3 days with 500 procurement, marketing, agency finance and consultants from the USA and increasingly overseas and to find out that everyone is facing the same challenges. But there is interesting progress and trends in many of the business challenges facing the industry.
This post also appears in AdNews