Procurement is a welcome reminder that CMOs must think like CFOs and act like CEOs if they are to make it to the boardroom, claims Kevin McNair, who joined soft drinks business Britvic as marketing director almost two years ago. In conversation with CMO.com recently we explored the need for a changing role of senior marketers in their organisations.
We began by asking him about the major challenges facing FMCG brands around marketing and cost, the area where procurement appears to be having a seemingly increasing influence.
McNair: There are currently two massive influences on marketing for FMCGs. Zero-based budgeting is moving teams away from just having the same budget plus a bit more than last year, they’ve got to decide strategy for the year ahead, and then budget accordingly, and start to prove ROI on that investment.
Economically, things have been fairly stagnant, so marketers have got to figure out how to grow their brands in an age of low growth. This normally requires us to get more people to buy us, which can be difficult in high-penetration categories, getting people to buy more of you or get people to pay a little bit more for more benefits.
That’s becoming a lot more complicated in certain markets because either the devaluation of the pound or rising commodity costs are pushing up the prices of most raw materials. So there’s a lot of uncertainty to navigate as brands need investment in order to deliver long-term growth.
CMO.com: How does this impact on procurement’s prominence? Any friction points ahead?
McNair: Procurement is going to be increasingly important in the coming years because there’s so much uncertainty around pricing. They do a very good job at driving cost down and helping marketing to work more efficiently.
I think we’re reaching a tipping point, though, because the balance is shifting. Procurement has been getting more powerful and they’re suggesting cost cuts, which marketers may not always be comfortable with. They’re suggesting, say, pooling work in to one agency and maybe reducing the amount of senior people working on your account.
We’re reaching a crucial point where marketers are going to have to seriously ask themselves whether what is being suggested is the right balance between quality and cost.
CMO.com: Cost management seems to be increasingly important, then. What lessons are there for marketers?
McNair: Marketers have got to act like both a CMO and a CFO. They have to understand how to both drive the top line as well as reduce the bottom line so they can deliver growth. It’s not enough to have some wonderful creative ideas. You’ve got to be entrepreneurial and financially aware.
CMO.com: This must have a major impact on modern marketers’ roles and responsibilities? There must be an impact on recruitment?
McNair: Today’s marketers have to be the CEOs of their own brand. They’ve got to be able to have all that creativity but also understand a P&L spreadsheet. They need to take responsibility for devising a strategy for growing their brands through an understanding of knowing what will drive the growth and how it will be funded.
I’m fortunate because I studied economics at university, but it’s hard to get people with that background into marketing, which is usually seen as more of a creative job. The thing is, it’s now both. Some of the huge FMCG groups used to have great training to get marketers involved in the economics of each brand and to have an understanding beyond just marketing alone, but I think some of those got pared back after the financial crisis.
CMO.com: This move for creativity to incorporate financial know-how must have an impact on agencies too?
McNair: Yes. I wouldn’t say the agency model is broken, but I would say the way things are now, certain agencies will have to look at what the right operating model is for them.
The traditional large London office with lots of smart people who can work on strategy and creative, and who are permanently on a client’s team, is going to have to change sooner or later. It’s already being challenged by smaller, more agile startups who bring in freelance talent when required to work a project at a time. I think this is going to start to become increasingly normal.
CMO.com: How will agencies have to evolve to remain relevant for financially aware CMOs?
McNair: Agencies are going to have to become more financially astute, just like their clients are having to be. CMOs are going to draw up a strategy, possibly paying a premium to work with the best guys to get a clear and inspiring brief. Once they know how they want to grow their brands and how much their budget is, they can work out how much will be spent on creating those assets.
It’s then down to the agency to make that work, and if they’re having difficulty, because they’ve got a large inflexible set-up, then they’ll need to alter it to be nimbler and concentrate on putting resources where clients want it. That’s where I think we’re likely to see slimmed down agencies outsourcing a lot more work than they do now but investing in quality strategic resource.
We’re at the end of the boom years now when the huge famous names made their global reputations through some fantastic work and made themselves the equivalent of advertising rock stars. People are now beginning to question the sacred cow. They’re asking the very simple question: “Why do I have to pay so much to have many people sit in your offices?”