Marketers need new models

19 January 2012

NEW YORK: Major brand owners should consider replacing current "sprawling" marketing structures with coordinated "centres of expertise" reflecting their changing needs, Booz & Co has argued.

The consultancy suggested existing "decentralised" marketing functions lead to wasted expenditure, alongside making it harder to take a holistic view and develop new capabilities in areas like social media.

It thus proposed forming "centres of expertise" with capabilities covering all communications activity which can be leveraged across the whole company. Early adopters of this model have seen efficiency gains of 15–20%.

One vital step is to secure an exact gauge of total marketing spend, a far from easy task given different teams handle various expenditure decisions, and because frameworks for defining and measuring such outlay are often absent.

Creating a common "taxonomy" related to the allocation and deployment of resources can overcome this problem and allow comparisons between teams and geographies, and can be supplemented by market-specific data.

Consolidating "transactional", repetitive duties – like media buying, creative development and data analytics – in low-cost internal locations or outsourcing them altogether can also increase coordination and reduce expenditure.

Oracle, the business services firm, has utilised this kind of system by centralising many core marketing responsibilities in India. This unit is accessible to its global divisions, and local staff report to a senior director based in the US.

By contrast, "expertise-based" disciplines including social media marketing, insights generation and campaign management should be kept in-house.

Harrah's, part of Caesars Entertainment, has a unit called Studio One, acting as a "gatekeeper" for services like digital marketing and predictive analytics, and ensuring its casinos and properties pursue consistent strategies.

Booz & Co said the "future model" must clearly define roles and processes, make the financial case for change, use new technologies in fields like customer relationship management and embrace a "pay for performance" culture.

Companies should also establish governance bodies containing senior executives and key marketing stakeholders, which defines strategic goals, reviews investments and provides accountability for decisions.

The study cited the example of Royal Philips Electronics, which handles branding and research at the corporate level, splits direct marketing and trade shows between business groups, and leaves local teams to implement campaigns.

Data sourced from Booz & Co; additional content by Warc staff