AGENCIES: THE NEW CMO

Feels like there are two big industry movements happening right now. (1) lots of large and high-profile mergers and acquisitions and (2) the CMO role continues its awkward evolution down(?). What’s going on? Is there a connection? And most importantly, what’s it mean for all of us?

First, a quick rundown of the current situation…

Feels like we’re in a particularly unique era of really big industry acquisitions (not just my perception, although that’s my perception, but the data is showing that there’s been about a 10%-15% uptick in major M&A year-over-year). By “major,” I mean big agency on big agency moves (like Omnicom and IPG). These huge behemoths become even larger, taking advantage of lots of power and efficiencies. And then we have all the big/mid agency on smaller agency mergers and acquisitions (like Publicis and Loathe and WPP and Stability AI), which seem to be more flat YoY but still pretty significant volume. It just feels like something’s in the air and there’s more than what we’re witnessing.

And then we have the tenuous stability of the CMO role (some brands changing the responsibilities, leaving the role vacant, tenure less than 4 years, and some brands killing the role altogether)

But why? Marketing environments continue to fragment, attribution is often hard to really understand, AI proliferation, budgets are slim, breaking through the noise is tough, audiences are fatigued, they’re now expected to directly impact revenue… the CMO is under a lot of pressure to deliver ambitious results, stellar ROI, with tight budgets and minimal latitude.

Oh, another reason the CMO role is getting the transformation treatment is because as these huge agencies become even bigger and take-on more varied capabilities, having a large in-house marketing department is possibly (probably likely) no longer the most efficient nor the most tech-forward option. And there it is, there’s the connection. These agencies are seeing the opportunity and building their businesses to essentially replace the marketing department as we knew it; and with it, the head marketer in charge. Oof, awkward.

Let’s dig a little deeper and unpack some of the compelling reasons this shift is happening:

Data - agencies are gobbling up first-party data companies. As cookies and privacy concerns continue to be a moving question mark, owning first-party data is crucial. And this agency data is different, better. Whereas brands own the information of their consumers, agencies are not limited to brand-specific data, they have access to a much higher volume of information, making their insights, understanding and strategies smarter and more data-driven

Tech - agencies have traditionally always held the frontline of tech and innovation, bringing their clients the latest technologies and pushing them to think differently. And they continue to do so (and more) with AI and automation, while growing and consolidating their own tech stacks through M&A. This then creates better consumer understanding and more streamlined, effective processes

Efficiency - with slimmer budgets, CEOs and CFOs are looking for more out of their marketing spend, meaning a hyper-focus on performance marketing. Brands have historically worked closely with media agencies in the buying, placement and optimization of media, ensuring they’re squeezing the most out of their media dollars, but now those same agencies offer broader strategy and more innovative technology to fill a whole host of gaps. They’re doing more than a traditional internal marketing team and doing it cheaper.

Consistency - as CMO tenures get shorter and shorter, the need for a consistent partner brands can rely on to carry forward strategies, creative and planning becomes more important

Now, obviously, I don’t know what’s going to happen in 10-15 years but it’s not looking so good for our CMOs. As agencies continue to consolidate, master AI-usage, broaden their services, and double-down on efficiency; CEOs are redistributing traditional marketing responsibilities across revenue, product, and data science departments… so it’s hard to see there being a rational pivot back.

But this opens up a new unique opportunity (maybe challenge?) for these agencies—how to be strategic and effective without the CMO’s internal soft power. One of the biggest strengths of the CMO role is to be the champion for creative conversation and cross-functional collaboration… essentially integrating different departments to maximize their collective impact.

But without the CMO and with all these once marketing-held responsibilities falling to multiple departments, who’s pulling them all together? The CEO? Doubt it. Another gap for agencies to fill, but this one’s different, more nuanced. Should be interesting.