CMO Survey: Nearly Half to Swap Shops

LOS ANGELES Get ready to defend. In the coming year, nearly half of marketers plan to fire at least one of their agencies and change direction, according to the second annual forecast to be released today by the CMO Council.

The survey of 825 chief marketing officers also indicates a trend away from traditional advertising and public relations and toward “customer-facing” and lead-generation programs such as event marketing and e-mail.

To achieve those goals, fully 45 percent of respondents said they intended to change agencies this year. First in the line of fire: Web design and development shops, followed by direct marketing agencies, general market advertising agencies and public relations firms.

Dave Murray, evp of the CMO Council in Palo Alto, Calif., said the interest in agency moves in the interactive sector dovetails with the top priority of marketers: to know their customers better.

“A lot of research we’ve done shows that Web is the top priority in terms of brand, customer engagement, insight, and it is becoming a bigger area of focus,” Murray said. “‘Good enough’ is a moving target.”

Dave Couture, principal, Deloitte Consulting, San Jose, Calif., who leads the marketing effectiveness practice, credited the potential agency shifts to a “misalignment of CMOs’ objectives and agency compensation.”

Last year, 54 percent of respondents predicted an agency change, and almost 60 percent of CMOs were true to their promise.

“The CMOs tell us that the agencies are not delivering,” explained Couture. “A ‘lack of innovation,’ ‘no value-added thinking,’ and ‘poor creative and/or poor quality’ are their biggest complaints. But the way the companies have structured their agency relationships is not drawing out of agencies what they want—or what agencies have been paid for.” He said CMOs need to revisit their agency “objectives, contracts and performance measures. The old adage, ‘You get what you pay for,’ applies.”

Vowing to plow more into e-mail programs, CRM, marketing-performance measurement “dashboards” and search-engine marketing, half of the respondents plan to increase their overall spending, while 37 percent of marketers expect spending to remain even, and 13 percent expect a decrease.

“The heat will be on to meet numbers this year, even more than in 2007,” said Murray, “with a greater focus on generating revenue.”

Added Couture: “It is part of the cautious tightening in advance of a possible slowdown. And we’re not seeing wild swings into different media or forms of advertising.”

Advertising ranked seventh in predicted marketing dollar allocation, behind “strategy and branding,” events and trade shows, operations, direct marketing, sales support and online.

Overall, CMOs—lately experiencing record-high turnover in their positions—report progress. Citing such factors as “impactful branding,” “awareness and reputation gains,” and better internal relations with sales and finance, 79 percent of respondents felt they had made positive advances in the perceived value of marketing efforts within their companies. But 21 percent felt they were stalled, or even losing credibility.

“On the one hand, the CMO focus on accountability and measurability and fact-based decision making is improving their position in the executive suite,” Murray said. “On the other hand, it is too early to say that we’ve seen a turnaround in CMO vulnerability or status or longevity.”

On CMOs’ wish lists for 2008? More than half (53 percent) want better quantification and measurement of their programs, followed by a desire for better customer insight and more efficient and effective marketing.

“Quantification is still the No. 1 goal,” said Murray. “But overall there is greater focus on getting close to the customer. It’s not that it wasn’t on the radar screen a year ago, but now CMOs are making marketing decisions based on customer insight with marketing analytics.”

The CMO Council study was co-sponsored by Deloitte, Marketo and TechTarget.