Marketing Organizational Structure Affects Revenue Growth: ANA Study

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CMOs Urged to Rethink Tactics and Implement New Approach

ORLANDO, Fla. (October 5, 2017) — Brands experience greater revenue growth when companies use a networked marketing structure with cross-functional teams as opposed to matrixed organizations with top-down silos and "dotted line" reporting, according to a new study form the ANA (Association of National Advertisers).

However, the study found that only 38 percent of respondents use a networked structure, while almost two-thirds use either a matrixed approach or a "command and control" structure in which directives are issued from the top down and functions operate in silos.

The report revealed that companies utilizing a networked structure in which cross-functional teams come together for specific projects are more likely to achieve a 6 percent revenue increase than companies structured differently.

Smaller companies (under $500 million in annual revenue) are more likely to adopt networked structures for marketing, while large companies (over $500 million in annual revenue) favor matrixed organizations, according to the report.

"Structuring and organizing the marketing function is one of the most important decisions a CMO must make to optimize the process for managing brand marketing and media functions," said ANA CEO Bob Liodice in announcing the study at the trade group's annual Masters of Marketing conference. "This study shows that too many companies are not organized for growth and need to change their approach or run the risk of sub-optimal performance."

 

KEY FINDINGS
The study also showed the following:

  • Some structures inhibit growth. Over one-third of respondents said their companies are not organized for growth, largely due to silos and structures based on internal functions rather than customer needs.
  • Marketing budgets reflect growth priorities. Marketing budgets average 8.6 percent of revenue, but companies better organized for growth invest substantially more: 10.2 percent. The top areas of investment are in customer data management and talent.
  • Specific roles correlate to growth. Companies organized for growth are much more likely to have roles in lead/demand generation, content management/writing, and marketing analytics.
  • Companies focused on the customer experience exhibit above-average growth. Roles in e-commerce, CRM/loyalty/customer experience, and shopper/channel/retail activation correlate to the greatest growth rates.

 

IN-HOUSE AGENCIES
Interestingly, the study also showed that more than two-thirds (67 percent) of respondents said they use in-house ad agencies or a combination of in-house and external agencies to save money and leverage their proprietary knowledge of their businesses. This was a noticeable increase from the 58 percent reported in the 2013 ANA In-House Agency Survey. External agencies are used for their specialized expertise and resource flexibility.

The presence of an in-house agency does not predict growth, but higher-growth organizations tend to use both internal and external agencies while lower-growth organizations rely most heavily on external agencies, the study revealed.

 

RECOMMENDATIONS
The study offered the following recommendations for implementing marketing organizational changes.

  • Own and manage the touchpoints. The marketing team needs to know about, understand, and have the ability to manage all the high-impact touchpoints that form the customer experience.
  • Embrace the data. Customer understanding is facilitated by a heavy focus on data. Marketing must own the customer data and constantly improve its proficiency to gain valuable insights. Furthermore, this capability should remain in-house for security reasons.
  • Acquire the skills. Customer data management was the top training priority. But almost one-third of study participants rated their ability to establish the right measures as poor. Many of the companies reported a data and analytics skills gap, and needed to reassess their skills to fill critical skills and talent gaps.
  • Have patience. Meaningful organization change is a journey — often a long one. Because restructuring can take a long time, it's important to set everyone's expectations accordingly. The journey involves changing the way the organization thinks, the attitudes of team members, and the culture, so it is unrealistic to expect beneficial, lasting change to come from one or two meetings.

Later this month the ANA plans to release a new organizational structure toolkit that includes customizable tools and templates to help marketers improve their organizational decision-making process.

 

METHODOLOGY
The survey was conducted online in June 2017 and July 2017 among a sample of 303. Of the respondents, 39 percent of marketers primarily work in B-to-B organizations, 23 percent in B-to-C, and 38 percent in both. Director-level or above make up 53 percent of survey respondents, and 30 percent of study participants have more than 20 years of marketing experience.

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ABOUT THE ANA
The ANA (Association of National Advertisers) makes a difference for individuals, brands, and the industry by driving growth, advancing the interests of marketers, and promoting and protecting the well-being of the marketing community. Founded in 1910, the ANA provides leadership that advances marketing excellence and shapes the future of the industry. The ANA's membership includes more than 1,000 companies with 15,000 brands that collectively spend or support more than $400 billion in marketing and advertising annually. The membership is comprised of more than 750 client-side marketers and 300 associate members, which include leading agencies, law firms, suppliers, consultants, and vendors. Further enriching the ecosystem is the work of the nonprofit ANA Educational Foundation (AEF), which has the mission of enhancing the understanding of advertising and marketing within the academic and marketing communities.

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