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Marketing managers scramble to meet challenges

The official theme of the 94th annual meeting of the Association of National Advertisers was "Masters of Marketing," but it might have been more bluntly, and more accurately, summarized as "Change or Die."

Speakers at the conference, which concluded here Sunday, warned the more than 700 attendees that executives who oversee the estimated US$300 billion a year spent on consumer marketing in the US must become more accountable, innovative and creative or be doomed to failure.

"The traditional marketing model we all grew up with is obsolete," said James Stengel, global marketing officer of Procter & Gamble, the world's largest advertiser.

"We are taking the reinvention of marketing very seriously at Procter & Gamble," he added, "and we all need to do that."

Stengel was one of several speakers representing big, well-known sellers of consumer products and services that are substantially reorganizing or rethinking their marketing efforts. The others included DaimlerChrysler, General Electric, Home Depot, Charles Schwab, Toyota Motor, Wachovia, Wrigley and Yahoo.

Those strategic shifts stem from a growing belief that most companies have already increased profits as much as they can through cost-cutting, said Michael Winkler, executive vice president and chief marketing officer of Hewlett-Packard, and need now to "focus on revenue growth" to further fatten the bottom line.

"Marketing has got to become a competitive advantage," he added, much like superior product quality or better customer service.

But a formidable obstacle looms, according to Winkler: many of the chief executives to whom chief marketing officers report think that marketing is "largely a financial black hole, an ambiguous function of the business, with immeasurable results and limited return on investment."

That was the subject of several hours of discussion on Saturday as the association and Booz Allen Hamilton, the consulting company, presented the findings from the first phase of a two-year study on corporate marketing.

"Marketing is more of a critical success factor than five years ago," even in fields where it has not traditionally been valued, like banks and other financial services, said Paul Hyde, vice president for the financial services practice at Booz Allen. "But it is being seen as disconnected from the CEO agenda" and as a result typically lacks adequate resources, he said.

"Marketing has a long-term focus, and yet corporations are expecting their chief marketing officers to deliver short-term results," he added. "CMOs are being asked to sink or swim and in many instances, it's `Mission: Impossible.'"

One inevitable outcome has been the revampings of marketing departments at more than 70 percent of the companies that responded to the survey, Hyde said, adding in an aside to the audience: "Don't go on vacation. Your job might not be there when you get back."

Indeed, the average tenure of a chief marketing officer is 23 months, he added, citing a study by Spencer Stuart, compared with 54 months for a chief executive.

Peter Littlewood, senior vice president for corporate marketing at the Masterfoods USA division of Mars, said that he and other marketing executives can prove their worth to skeptical chief executives by "thinking about consumers, about brands, about creating demand."

For instance, Littlewood said, "we believe there's a huge opportunity for M&Ms in customization and personalization," offering candy made to order in special colors or stamped with names, initials or greetings, "but shipping consumers customized colors X days ahead of a wedding is a very different business model" from selling them in standardized packages in supermarkets, drugstores and newsstands.

The corporate marketing study is part of plans by the association, which represents almost 350 companies that own about 8,000 brands, to "promote, encourage, cajole and when necessary fight for greater accountability," said Robert Liodice, its president and chief executive.
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