Marketing Organization

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

Growing customer demand for digital experiences and ecommerce has meant that marketing departments have increased importance inside companies. As February 2021 CMO Survey reports, marketers agree that digital marketing became a pillar for their companies’ success during 2020 and paid off big. With digital marketing increasing its contribution to company performance and digital dominating the channel mix, it can no longer be looked at as a structural adjunct in marketing organizations. And as digital marketing goals have expanded beyond top-of-funnel brand awareness, new strategies require the integrated use of all channels.

As Altimeter@Prophet concludes, this means a consolidation of most if not all digital channels under marketing. Structurally, the common organizational models governing marketing and digital are centralized, decentralized, hub and spoke, and Center of Excellence (COE).

Wells Fargo is an example of a company where there has been a shift from decentralized to centralized. It moved from vertical integrations around products to a centralized marketing structure, where centers of excellence were created that matrixed with the Wells Fargo leadership team and operation committees.

Michael Lacorazza, Wells Fargo’s executive vice president and head of integrated marketing explains, “…our team takes the lead on the large-scale integrated campaigns, paid and owned channels, and our in-house and external agency relationships.” This resulted in operational efficiency and better collaboration.

The resources below include criteria for determining which might be most optimal against different circumstances and strategies.

Best Practices and Trends

    Is Your Marketing Organization Ready for What’s Next? Harvard Business Review, November 2020.

•     Sweeping technological change has revolutionized marketing, while societal challenges have raised expectations about marketers’ social performance. This has altered customer needs, accelerated the entry of new types of competitors, and generated novel opportunities for value creation. It has also transformed how the function must work, requiring that it become more agile, interdependent, and accountable for driving firm growth This article provides a framework to help leaders identify the organizational design and capabilities needed to build a competitive, next-generation marketing function. This framework has been used to guide marketing transformations at companies across industries, including consumer packaged goods, transportation, financial services, and retail.

    Marketing Organization: The Evolution to Centralized, Functional, and Agile Continues. Gartner, September 2020. CMOs are evolving their teams through increased centralization, more functional alignment, and continued exploration of agile marketing practices. These changes are helping build more scalable, flexible, and resilient marketing organizations. Gartner’s survey of over 400 marketing leaders found that:

•         Functional marketing organization structures are the most common of all structural alignment types. Industry-, brand-, and channel-specific structures are less frequently used, but still present in almost 20 percent of marketing organizations.
•         Functional structures grew by 4 percent year over year from 2019, and industry-focused structures grew by just two points. Brand, channel, and geocentric models faded by as much as five points.
•         Two-thirds of marketers (66 percent) have centralized structures. Marketing leaders are seeking efficiencies of scale, improved responsiveness to internal needs, and more concentrated skill levels in specific disciplines.
•         Half of marketing organizations (49 percent) are using shared services or center of excellence (COE) structures. Consistent with the overall trend toward centralization, areas like marketing operations, content creation, analytics, and other functions are operating with these models.
•         Agile project management approaches were perceived to be as much as 25% more effective than traditional project management across multiple dimensions. Agile drove better responsiveness, prioritization, message adaptation, timeline delivery, and execution performance than did traditional project management.

        Gartner recommends that marketing leaders focused on marketing organization and talent should:

•             Evaluate functional structures — groups focused on a discipline such as operations, content, or commerce — as an organizational alignment option. Functional structures work well in concert with agile, agency-style operations, which are becoming an increasingly common marketing operating model.
•             Assess whether a centralized structure will allow your organization to better leverage capabilities across business units, regions, or groups, or mitigate marketing governance and control risks. Consider the advantages as well as the difficulties responding quickly to regional or divisional needs that can also come from a more centralized approach.
•             Experiment with shared services, COE, in-house agency, or pod functional groups. Benchmark your use of those groups against these survey results and consider experimentation or implementation of those structures in the appropriate areas.
•             Challenge your organization’s thinking about agile marketing. Educate your organization on core agile principles and fundamental agile practices and tools. If your organization is already utilizing agile practices in other groups, leverage the momentum that may exist from those efforts, but adapt agile work styles to the unique needs of your marketing organization.

    Organizing for Digital Marketing Excellence. Altimeter@Prophet, January 2020.

•     The best way to organize digital marketing functions is to do it according to the digital marketing strategy: structure follows strategy. Altimeter@Prophet recommends a four-step “outside-in” approach that determines the scope of digital marketing’s responsibilities, the nature of its relationships with other marketing functions, and the organization of its internal resources.

The Evolution of Marketing Organizations. Deloitte, January 2020.

• This report surveyed 400 CMOs from across the globe, averaging nine years of cumulative CMO or head of marketing experience, and looked at uncovering growth, changes, and missing links in the modern marketing organization. On average, CMOs are responsible for seven direct reports and departments totaling 69 individuals. By far, marketing strategy and marketing operations/technology make up most of these direct reports, at 78 percent and 70 percent respectively. In organizations with divisional marketers, 81 percent report to the CMO or into the marketing organization, 11 percent are dotted line, and only 4 percent report elsewhere.

    CMO Survey. Deloitte | Duke Fuqua | AMA.

•     Over the past year, the biannual CMO Survey changed its focus from routine marketing budget and organizational questions to look at the impact of the pandemic, as well as political and social justice issues, have had on marketing priorities. One impact has been an 8 percent to 9 percent reduction in the size of marketing teams, which CMOs optimistically expect to replace by 2022. Of these losses, 28.1 percent were senior manager roles. The hardest hit sectors were B2C services (-12.3 percent), with consumer services (-18.7 percent) and communications/media (-15.5 percent) reporting the greatest losses. For more on the pandemic’s impact on marketing jobs read here.
•         The Transformation of Marketing: Emerging Digital, Social, and Political Trends, the February 2021 edition of the biannual survey, affirms the nascent trends of digital acceleration observed in the June report. Digital transformation was thrust upon companies as they sought new ways to reach and engage with customers. Marketing, as the function and process responsible for managing customers and the firm-marketplace interface, was placed at the center of many corporate initiatives: 72 percent of marketing leaders responded that the role of marketing in their companies increased in importance during the last year. This importance was further heighted by the social and political upheaval experienced in the United States. Transformation required rethinking many aspects of business to approach and survive our changed world more effectively. Many marketers were optimistic that the 8.2 percent of marketing jobs that were lost during the pandemic would return within one to two years.
•         COVID-19 and the State of Marketing, the June edition of the biannual CMO survey, found that COVID-19 accelerated the adoption of digital tools among companies and customers. Eighty-five percent of marketers reported an increased openness among customers to their digital offerings and 84% believe customers placed more value on digital experiences than before the pandemic. CMOs adjusted their offerings and pivoted their businesses to meet these new expectations and opportunities, with 60.8% indicating they have shifted resources to building customer-facing digital interfaces and 56.2% transforming their go-to-market business models. CMOs are also using their employees to get active online (68.6%) and to improve digital interfaces (61.8%). However, 2020 also saw a 9% loss of marketer jobs, which will leave marketing departments leaner in 2021. The expectation is that marketers will have to do more with less through the next year or two. Detailed findings here by firm and industry characteristics.
•         The February 2020 issue of the biannual CMO survey followed the standard reporting format, reporting results on trends in marketing spend, budgets, capabilities, and department size. The overall finding was one of marketer optimism pre-COVID. Detailed findings here by firm and industry characteristics. This was also the last edition of the survey in the past year that reported on marketing organization size, in the question: “How many employees/marketing employees are there in your company?” (page 155). The highlights and insights version of the report can be found here.

    How to Structure a Marketing Team. Deeply Digital. November 2019.

•     The author of this article suggests this possibility: “Instead of structuring a marketing team based on generalists vs. specialists, consider instead a hybrid approach. Hire generalists that also have a really strong understanding of one or two core areas, or hire specialists that can see how their skills fit into the wider marketing puzzle: When assessing potential hires for this structure, consider two questions: Do they know a little about every area of marketing? Do they have an area of depth that they can contribute to the team?”

    Digital Marketing Center of Excellence Best Practices. Smart Insights, June 2019.

•     The role of a Digital CoE is to maximize the potential opportunities of digital media and technology to meet the multichannel marketing goals of an organization. A DCoE or Marketing Center of Excellence is often a key part of digital transformation projects since it encourages adoption of best practice in deploying relevant digital media, experiences, insight, and technology across an organization. However, a Digital COE is not right for every company. COEs are worth exploring if these conditions exist:

        – Specific capabilities are needed
        – Specialized knowledge is required
        – Knowledge is difficult to acquire
        – The capability is important to the business
        – Central oversight is required
        – Organization culture and size align to the CoE model
        – The capability is relatively homogeneous
   

The Modern Marketing Department: Evolution through Digital Transformation. eMarketer, May 2018.

•     Technology is the not main barrier to change; rather it is the requirement that companies rethink organizational structure, workflows, and customer experiences that hinders the transformation of the modern marketing department. This report covers the people, processes, and partners involved in executing digital transformation inside companies. It also discusses case studies, such as Aetna’s total marketing reorganization and realignment of its operating model. Also of interest is reporting on the status of the Centers of Excellence framework, which has garnered mixed reviews and appears to not be as popular as in the past. However, it is noteworthy that Bain & Co. is still actively developing CoEs for clients to foster experimentation and optimization in digital.

Webinars

•         Creating Competitive Agile Marketing Organizations. ANA, November 2019.
•         Many marketing organizations are transforming their operating models to adapt to a rapidly changing digital world. BCG discussed the key success factors for marketing organization transformations, especially in focusing on speed and agility as a competitive advantage. In this webinar, learn about:

                  – How agile marketing organizations build the capability to lear

                  – How the role of external stakeholders, including agencies, is evolving.

                  – How agile marketing organizations invest in data and technology to drive performance and scalability.

                 – Why it’s critical to create new roles and identify new talent for cross-functional and cross-channel execution.
Tools

•      Selecting an Org Structure for Marketing. ANA/Demand Metric, November 2018.
•     This how-to Guide was designed to show what common marketing org charts look like, the pros and cons of each structure and how to select the best org structure for your company.
•     Marketing Organizational Structure Toolkit. ANA/Demand Metric, April 2018.
•     This toolkit for optimizing marketing organizational structures includes a checklist, how-to guide, and job descriptions for must-have marketing roles. Visit the Marketing Organizational Structure Solutions Set for more tools and resources.
•     World Class Marketing Organization Maturity Model. ANA/Demand Metric, November 2019.
•     This model was designed to help organizations with a roadmap for improving their overall marketing capabilities. It clearly organizes core initiatives for each component of the model, allows you to understand where your organization’s capabilities for marketing is overall, helps you learn how to move from one level to another, and offers key metrics that will help measure your success.