Key challenges for the CMO
Digitising marketing operations, shifting from campaigns to products, and developing an agile mindset are the key challenges for the CMO.
In recent times, marketing has brought new challenges for the CMO by evolving along two orthogonal vectors:
- the shift from campaigns to products
- digital transformation.
Both are, of course, highly interconnected. Campaigns are the modus operandi of marketing in the analogue, physical world, as long as products are physical items and digital maturity of a given company is low. Since marketing spending is always limited and media buying is expensive, marketers organise their activities by campaigns, i.e. more or less short bursts of high intensity. That’s how it’s done, and earned or owned media don’t change much.
The CMO who finds themself in this corner of the market, with low digital maturity and campaign-driven marketing, faces two major challenges:
- the need to automate marketing operations (through digitisation)
- the hurdles of regulation, e.g. GDPR.
Digital channels – and that’s what we’re talking about at this stage – require a certain amount of automation these days to be efficient and effective. And since automation needs data to be sufficient, marketers in this corner have to deal with either powerful third-party platforms or the challenges of gathering their own data. This is the vector of digital transformation: increasing digital maturity.
Pivot to the product
Marketers who already achieved high digital maturity still face the challenges of the other vector: they need a pivot to the product. In this realm, products are no longer physical items (though there still is a physical layer) but digital services. And these have marketing built into a service layer. Marketing becomes the product and vice versa.
Take for example a delivery service for organic food. The company can and should automate and digitise its marketing operations, but the real deal is building its own digital platform: an online shop, where customers can order their organic grocery items and manage payments. The platform then evolves into the marketing hub, becoming the main interface to the consumer and, ultimately, the product.
We’ve seen companies like Delivery Hero or Lieferando taking the customer relationship away from restaurants and takeaways. Amazon, Google and Facebook have done the same for countless industries. They commoditise the products of more and more industries and thus reduce them to mere supply for Big Tech. Amazon Prime, as a prominent example, becomes the product which includes free and fast delivery of almost anything the consumer needs or wants.
This is why marketing must shift from campaigns to products. And this means innovation, since product is another word for innovation.
Pivot to digital
For companies with low digital maturity, but with marketing that’s already product-driven, the CMO’s main challenge is a pivot to digital. The leading question is: How can your product be rendered in digital form, and what does this change? This digital transformation turns a product into a digital service by adding a service layer. The physical substrate of your legacy product gets wrapped into a new digital product.
This move has huge implications, and perhaps the most significant is the vertical integration (verticalisation) of marketing and sales operations. A pivot to digital means going directly to the consumer. This can translate into opening your own retail outlets. Case in point is Apple, which sells through both direct and indirect channels.
On the other hand, we see the horizontal integration (horizontalisation) of marketing through the rise of platforms and ecosystems. Digital products and services are either themselves platforms or built upon a platform, and they are part of an ecosystem. Both platforms and ecosystems need to be carefully designed and developed over time, with the upside of possibly huge network effects. This makes them highly relevant for marketing.
Scale and growth
The lucky CMO of a company that has already managed both pivots, with high digital maturity and product-driven marketing, still has some homework left:
- the need to scale marketing operations
- the pursuit of growth.
It’s one thing to automate and digitise marketing operations, or to design and develop digital products, platforms and ecosystems. Scaling and growing them is a different ballgame. This requires capital, access to different markets, operational excellence, and perseverance, to name a few.
The role of the CMO is evolving, and this comes with new challenges. Traditional marketing never really cared about the customer experience, which has now become front and centre. It’s the first thing to worry about, along with the brand purpose. And don’t confuse the purpose with an arbitrary, artificial positioning, as many brands did in the past and still do today. It’s the consumer who defines the purpose and employs a brand to serve it.
The agile CMO challenges
The new role of the CMO requires an agile mindset. It’s not mere happenstance that marketing is now adopting agile principles. Digital product development and technology have a long agile history, but suffer from other parts of the organisation maintaining linear, clumsy and rigid management styles. Agile frameworks like SAFe could only mitigate this clash. The Agile Marketing Manifesto, first published nine years ago, adapts agile values and principles to the marketing domain.
What does that mean in practice? Here’s an example:
“Rather than spending months iterating on a message, get it out there and test it, get feedback on it in context and continue to adjust or refine it. Every time you read something you will find ways to change or improve it. Rather than reading it and reading it and then editing it and editing it, get it out there for real feedback and see if it works and what needs to be changed.”
CMOs need to tap into the power of fast feedback loops to up their marketing game and respond to today’s key challenges.