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CEOs and marcomms…

In the past few months, two major marketing and communications contracts have gone out to tender. HSBC’s potential £400m global marketing and communications business, while B&Q has recently moved its £34m UK creative account. 

A decade ago, even big marketing budgets might not have attracted the attention of the CEO. But according to research by The Observatory International, chief executives are growing increasingly interested in how their marketing and communications budgets are being spent.

The research found that over one-third (36 per cent) of CEOs had become actively involved in appointing the agencies who would execute the marketing spend, with the majority (65 per cent) doing so out of greater awareness of the importance of marketing and communications, and its effects on the brand.

Sometimes there’s a once-in-a-career opportunity to take the business in a particular direction that the CEO will want to steer. But sheer accountability is the central reason for greater CEO involvement: they want to ensure significant spends deliver a healthy return on investment.

While they recognise the importance of brand value to the bottom line, they may lack a clear understanding of what they can reasonably expect from their marketing and communications suppliers.

Time to switch?

If CEOs are to become more actively involved in agency selection, they need to understand what they are buying and the potential risks inherent in switching agencies. Inviting pitches can be high-risk in the short term. Those involved could take their eye off the day job for a time. Longer-term, if you appoint the wrong agency, you could endanger the brand’s health.

Better management of existing suppliers through better briefing and processes may prove more cost-effective than a wholesale change of agency. Consider why you want a new supplier: if it’s purely a cost control issue, it may be better to continue with the same agency, but with some improvements to process management, or to commercial terms via benchmarking.

Often, the desire to leave an agency is a symptom of the creative work – the campaign ideas may be flat, the agency has lost sight of the business’s aim, or costs may be escalating. The downside to firing your agency is loss of institutional knowledge. Quite often, agencies may have a longer history with the brand than its own corporate marketing teams.

At other times, the relationship between agency and client may have soured and switching is the only option. Then the focus is on the upside: the potential to negotiate a better deal and to get a new set of eyes on the business.

The CEO and the pitch

Before offering business out for pitch, there should be some preparation between the CEO, the head of marketing and finance to agree expectations.

The interests of the main stakeholders – the CEO, CMO and CFO – need to be clearly aligned. You can plan a perfect pitch process, but unless the CEO is aligned with the brief early there’s a risk of confusion down the line. If the CEO and the marketing team aren’t aligned, no pitch will hit the mark.

Different priorities need to be ironed out – a CEO might favour a ‘holding company’ model because it appears to be more efficient and cost effective. But locking into one holding group may not be the seamless solution it appears, and can breed complacency that results in longer-term brand communication problems or missed opportunities.

Invest the necessary time to create a great brief. There is no set rule regarding how long a pitch should take, but skipping bits of the process, such as workshops and meet-ups, or giving agencies insufficient time to pitch is counterproductive.

Ensure you get the right candidates into the process and that local teams are involved appropriately if it's a global campaign.

Managing the new set-up

The agency should understand your organisation’s strategy, goals and plans and be commercially-minded. But this cuts both ways: too often clients keep the agency away from their overall business strategy. It is incumbent on businesses to ensure the agency is informed. An organisation’s strategic plan might include ideas for new markets, innovation expectations and a two, five or even 10-year plan. Keeping the agency briefed on longer-term plans will ensure they don’t become stuck in the here and now.

This calls for more integrated solutions, perhaps getting fewer agencies together to integrate and collaborate. Appointing one lead agency or just getting better collaboration from providers may yield better results.

Success is largely the result of preparation and active stakeholder management. Performance evaluation should be structured, held regularly, and, ideally, led by a third party so that everyone can be honest about how they feel a campaign or overall performance is going. There are different structures for improving agency-client relationships, but tweaking existing relationships will almost always yield better results than a distress call for a new agency.