The boardroom verdict

More marketers may be taking seats in the boardroom, but its members are still struggling to understand exactly what the discipline can do for a business. Board members at big brands tell Lucy Handley what they really think of marketing in an era where procurement and the finance director are king

Click here to read what other board directors really think of marketers
Click here to read marketers respond to the accusations

boardroom

What does your boss really think of marketers? Does your CEO value you and your department? While many marketers have been working hard to prove their worth in the boardroom, it seems that question marks remain over how much impact marketing really has on a business.

Many non-marketers told Marketing Week they believe that marketing directors are being left dazed by data, while others are dumbfounded by marketers’ willingness to be seduced by social media without really understanding how it can benefit the business.

One commercial director, who works with a variety of brands, says: “Marketing as a discipline has almost lost its way in recent years. With the recession and constraints on budgets, marketing has decreased in terms of its profile and role.” (See The Viewpoints, below)

Others add that instead of relying on big budget advertising, marketing can make more of an impact by understanding and using digital media much more effectively. They believe that marketing is failing to link new creative approaches with the bottom line.

One board member says: “The older generation marketers and agencies are struggling to leverage return on investment through digital channels, experiential marketing and sponsorship. Marketing teams should combine creativity with ROI.” 

Another comments: “They need to fully understand digital media channels because that is definitively not working at the moment.”

A managing director at a big brand, who did not wish to be named, says the customers have taken control of the “digital revolution” to the detriment of the department. “The digital revolution is having a tremendous impact on marketing, but marketers risk losing the ownership of it,” he warns, adding: “A lot of the innovation in customer experience marketing is very much technology-driven. If you think about how businesses work, it is not the marketing department in charge of that, it is the IT or digital teams.”

If other departments take control of customer insight, then marketing is in danger of losing its power tool, the managing director adds. “There is a risk that marketing will lose the initiative and it needs to make sure that it guides those innovations and that they provide the voice of the customer.”

Instead of pretending that other departments don’t have an influence over the customer, marketers need to start talking to technical staff and work together rather than in silos. “Everyone likes to own something. The danger is that when IT and marketing don’t work together, the process is run by one department at the exclusion of another,” says the big brand managing director. “It is partly about marketing getting off its high horse and trying to understand the IT function a bit better, and vice-versa,” he adds.

There is further evidence to suggest that board-level IT people and marketers disagree about who should be in charge of digital communication. There is a significant disconnect between which board member thinks they are in charge of digital marketing, according to a report published by Accenture Interactive earlier this month.

Accenture surveyed 600 chief marketing officers and chief information officers and found that 58% of CIOs claim to be their company’s champion for digital marketing.

However, only 19% of CMOs agree that the CIO holds that role, and 70% of CMOs think they are in charge of digital marketing.

For Michael Svilar, global lead for marketing analytics at Accenture Interactive, both CIOs and CMOs can lead a company’s digital strategies, but they need to start working together quickly and flexibly. He says: “The decision-making is now much more real-time, so [people need to] focus on being more agile, rather than just thinking about an annual plan that they are going to execute relatively blindly.”

Unless marketers learn to disseminate technical information, their jobs may become defunct, he warns. “It’s about how you use the data, not taking three months to learn something from it. It is going to take a different mindset, someone who is more tech savvy. It isn’t just going to be a marketing space; marketers don’t understand the technology well, so it will be a team effort,” he says.

While IT specialists and marketers often struggle to develop effective working relationships, a lack of clear business communications from the marketing team is also causing difficulties for other departments.

Lack of business sense

A complaint levelled at the marketing department by a managing director of a financial services brand is that there is a lack of understanding of how customer insights can be turned into useful information that benefits business (see The Viewpoints, below). Customer “satisfaction” is something that most brands measure, but this MD says there is sometimes a lack of sensible suggestions for what should be done as a result of the insights gleaned from research.

“Marketing departments at their worst tend to produce lots of ‘customer satisfaction’ graphs and numbers, but there is no call to action,” according to the MD, who adds: “There is no suggestion that if we changed advocacy from X to Y we can then prove there is a tangible benefit to the business.”

Clearly, tangible benefits mean additional sales. Because of the recession, ROI and making sure marketing spend represents value for money are high priorities. As a result, the finance director and procurement department are much more closely involved in marketing.

The financial services MD says that as new board roles have emerged during the recession, such as chief risk officer, marketing has become less important. He says: “There are only so many roles you can have in the boardroom and, in the current climate, risk and governance dominate the conversation.”

In response to these opinions, Teletext Holidays marketing director Mark Bloxham agrees that finance is more involved now, but argues this has made for better relationships with consumers (see The Marketers Respond, below). He says: “The recession has created a more cautious, frugal and considerate consumer. This has allowed marketing departments to use historic knowledge and brand trust to build relationships with them.

The digital revolution is having a tremendous impact on marketing, but marketers risk losing the ownership of it

“Working with finance departments allows marketers to understand the larger financial implications of a business, and gives keener insight into targets.”

Marcus Leyden, formerly head of procurement at Somerfield and now a director at consultancy Brightsourcing, adds that marketers ought to be thinking more carefully about how they can do more with less money. “The challenge is whether they could actually have done it for 30% less than budget. And a lot of people don’t have the time to research and understand and negotiate to get that better return,” he says.

This is where the influence of procurement could benefit the reputation of marketing. For Leyden, marketers have been used to the influence of procurement in below-the-line activities and now have to allow above-the-line buying to come under the procurement director’s scrutiny.

He explains: “There was a journey at Somerfield. As procurement demonstrated more competence in below-the-line activity, such as in sourcing commodities like paper, I think the trust was gained from marketers involved in above-the-line activity.”

As well as working more closely with the finance and procurement teams, Peter Williams, former chief financial officer and chief executive at Selfridges, says marketing can work harmoniously with the finance teams but that all marketers need to get to grips with how spending their budgets impacts on the rest of the business. 

Williams is now a non-executive director at Cineworld, Silverstone and fashion website ASOS and has come across marketers who do not understand budgets. “I have worked with various marketing people over the years, and there was one who regarded the budget as a bit of an irrelevance. She would say: ‘Don’t worry darling, it’ll be fine on the night. Now come to the launch party’.”

Marketing departments at their worst tend to produce lots of ’customer satisfaction’ graphs and numbers, but there is no call to action

This lax approach to the budget can sometime cause friction between departments. Asda’s former human resources director David Smith admits the marketing budget can sometimes be the subject of envy (see The Viewpoints, below). “Marketing is often seen as the rich man of the boardroom, with the big budgets. The first thing to get cut whenever a business is in difficulty is the training budget,” he says.

The battle for budgets has become more important for all business functions. And the difficulty is that siphoning off a sum of money called “the marketing budget” can make marketing appear to operate in its own silo.

Working as a closed unit is not good for customers, according to the big brand managing director. “There is increasing friction between trading teams and commercial teams wanting to get their message out. Marketing departments are trying to protect the customer’s interest, so they are focused on their role as gatekeepers to the customer.

He warns: “But there is a risk that they lose their battle with other departments. It is not just about protecting the customer but also trying to achieve all the objectives of the business.”

The viewpoints

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David Smith, previously HR director on the board of Asda, and now a consultant

Accusation: Marketers get the big bucks

I think there is genuine friction between marketing and HR because marketing is seen as the rich man of the board, with the big budgets. The first thing to get cut whenever a business is in difficulty is the training budget; marketing gets protection because people put a bit of a fence around the budget.

You have to have banter and humour and debate things and that is how I’ve always resolved things [like this] in the organisation.

It’s all about agreeing an agenda that looks at the key issues and how we can work together to fix them, whether that is done through informal workshops or chats around the coffee machine.

It all has to relate back to where the business wants to be. Everyone who is playing a functional part in whatever silo they are in still has to play their part in the big agenda, and that is what happened at Asda.

There is always a relationship between marketing and human resources because the whole issue of customer data and customer perception feeds into what the people [HR] policies are actually achieving.

So, if Asda is trying to hire gregarious people to make the business more friendly it will show up in what the customers think [and therefore reflect back on to customer perception data, used by marketing]. I used to spend a lot of my time in customer listening groups and doing what we called the company shop, where we’d give someone £50, accompany them on their shopping trip and listen to what their motivations were in terms of what they put in their basket.

Whenever we sat down in a customer listening group they would say three things about why they shopped in Asda – one was the great value, second they said George [clothing] because it is cheap fashion, and third they’d say that our people are the friendliest supermarket staff.

So there is a close relationship between trying to get people to perform at a certain level and the marketing department, asking about what customers think [of the brand]. So we talked a lot about perception data with the marketing team.

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The managing director

Accusation: Marketers work in silos, failing to communicate how they benefit the business

A criticism levelled at the marketing department by one managing director is that it can exist almost separately to the rest of the business.

The managing director of a financial services brand, who does not wish to be named, says that a company he previously worked for had a central marketing department that charged each business unit a set levy every year for marketing campaigns.

He explains: “I used to have to pay more than £1m a year for the overall spend on the brand, so I used to write a cheque out at the start of the year. I never really got passionate about the central marketing, I just saw it as an overhead.

“That is when marketing becomes so detached from the business that people lose sight of the value that it can add when it is successful. When a marketing function works really badly there isn’t that level of engagement with all of the business units.”

He adds that he felt ignored by the central marketing team. “If there are several business units in a company, a centralised marketing function is not going to consult with everyone, because everyone wants something slightly different, so the marketers ignore all of them and do what they think is right.”

Having a separate marketing team means that the individual brands in a business are not as close to customers as they could be, he says. “Compared to any other function of a business, marketing is probably the one I would keep the closest to the business, rather than have it looked after by a central brand team. Marketing works best when it is closest to the customer.

“If people are charged a brand or group levy for marketing and they don’t see the benefit [to their business unit] then it is viewed as an overhead rather than a business enabler.”

The managing director also says that marketing is at risk of being seen in some boardrooms as a way of showing that customers are happy and therefore just to keep shareholders satisfied.

He suggests that running a portfolio of brands where each business unit looks after its own marketing can be a solution. “There is an argument for running a portfolio of brands and I’ve seen that work successfully. But sometimes the job of the chief executive is to accept that you are not going to have homogeneity of people’s views.”

He adds. “Good marketers tend to be able to do the analysis, translate it into financial metrics and create a platform for the business to take a different view.

“Successful marketing departments understand the channels in which a business operates, they are strategic, they understand the market and are able to challenge the business as a critical friend.”

The marketers respond

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Philip Price, head of brand marketing, P&O Cruises

Most marketing departments are now leaner and wiser than they were two years ago. A contributing factor to this is the increased involvement of finance in our business.

In gaining an insight into the real effectiveness of what we do and understanding its commercial effects, we now work more closely with our financial analysts than ever before.

This includes end-of-month reporting to planning investment against the future booking curve for P&O. It’s more work, but making marketing more accountable is not a bad thing.

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Marc Sands, director, Tate Media and Audiences, and former marketing director, Guardian News and Media

Everyone in the boardroom has an opinion on marketing. Few have an opinion on personnel, and most of them don’t understand finance. So that is one issue: everyone thinks they can do it.

The question should not be whether marketing directors are worth their salt. All organisations over the past 10 or 20 years have become more marketing-focused, so in that sense you’d argue there is progress.

The impact of marketing over the past 20 years has been staggering, such as in the ways companies put consumers closer to the centre of an organisation. And that has got to be good news.

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Mark Bloxham, marketing director, Teletext Holidays

It is vital to explain strategic marketing plans to all senior people, whether that is the chief executive, finance director or chief technology officer, so that they understand it and you can make sure it matches corporate objectives.

Analyses and full campaign integration are the only ways to combat naivety on ROI. Delivery to the bottom line is about segregating activity in terms of what it is going to achieve, and then aligning the whole [marketing] programme to deliver bottom line growth.

I have experienced some extremely senior non-marketing people in certain industries around a boardroom table making wild statements such as “we should be on Twitter or that social media stuff” or “can we just not do paid search?” I remember the onset of the web, ecommerce, paid search, SEO and social media, and as a function have championed it, and delivered sound reasons for using particular channels.

Keeping the message simple

Peter Williams, former chief financial officer and chief executive at Selfridges, believes that marketing can be crucial for helping turn businesses around, such as when Selfridges repositioned in 2001. The brand moved from being an exclusive store to an accessible one, where brands such as Louis Vuitton are now sold alongside Top Shop.

Marketing has been the best department to talk about this change in strategy, he says. “Communicating that accessibility point is really important, and that it is about the product and the experience. Getting the marketing people to articulate that in a way that the shareholders, suppliers or staff can understand is really powerful,” he says.

But he adds that some marketers misunderstood how to execute the new strategy, with some keen on discounts and promotions rather than articulating the new single-minded proposition that Selfridges now represents. He says: “Having people who focused on price-led promotion is a cack-handed way of going about it. Marketing should be a thing that reinforces the full prices that you are selling at,” he argues.

As a non-executive director at ASOS, he is keen for marketers to keep to a single-minded proposition for the business as it grows. It has morphed from a website selling clothes that were similar to those worn by celebrities, but for cheaper prices, to what Williams calls a  “fashion search engine”, selling a huge choice of clothes, including upmarket branded goods.

“You need to have a clear message for everyone to understand and then execute that pretty ruthlessly. There is always a danger that in a new young company, in a new market, you try and do too many different things,” he says.

For Marc Sands, former board marketing director at Guardian News and Media, and now director of Tate Media and Audiences, actually executing a marketing strategy can cause problems for marketers.

He says: “The bit that people are most critical about is that there is a leap of faith from the strategy to the execution [of that strategy]. If you get the judgement wrong from marketing strategy to execution, you can still fuck it all up, and that is a problem.” 

What Mark Ritson thinks…

Most marketers are unable to speak the language of the boardroom. Ask a marketer why their company should invest in brand building and inevitably they will give you the arguments of increasing brand awareness, differentiation and creating a consistent look and feel. All good arguments from a marketer’s point of view, but entirely trivial and unimportant issues for the big cats that run most companies.

The only arguments that will cut the executive mustard relate to profitability, share price and return on equity. And these are conversations that many marketers seem simply unable to contribute to, let alone initiate.

The prime directive of marketing is to understand your customer. Even when a marketer is able to apply that rubric to the external customer base, they are usually unable to do the same thing with their internal leadership teams. That means that even when we do occasionally get a marketer on the top table, they risk making an arse of themselves because they simply cannot market their discipline or viewpoint to others.

And unfortunately there is a ton of empirical evidence to demonstrate that my own personal experiences of marketing in the boardroom are not atypical. A 2008 study that spent five years following 167 companies with a board-level chief marketing officer concluded that there was no empirical evidence to support the notion that having a CMO made any difference to company performance. Or to put it more simply, getting a marketer on the board adds no demonstrable value to most organisations.

Marketers on the board! is the clichéd rallying cry. Great in theory, crap in practice. The harsh reality for marketers is that, as yet, many of our professionals simply don’t have the political savvy to add value at the highest level. Back to the brochures and positioning statements then.

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