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‘It'll have a ripple effect’: Coke’s CMO U-turn could mark reappraisal of threatened role

Manuel Arroyo, Coca-Cola's new chief marketing officer

Two years after espousing the benefits of ridding itself of a global chief marketing officer role in favour of a ‘chief growth officer’, Coca-Cola has made a surprise U-turn. This resurrection of the chief marketing officer (CMO) role could have a ripple effect and see the value of the role reappraised within boardrooms.

Coca-Cola announced yesterday (16 December) that following the retirement of Francisco Crespo, who had held the chief growth officer position, it had opted to reprise the global CMO role with the appointment of the president of the company’s Asia Pacific business, Manolo Arroyo (pictured).

Unlike Crespo, Arroyo will not have responsibility for corporate strategy or customer and commercial operations, which will now fall chief financial officer John Murphy chief operating officer Brian Smith respectively

Coke said that this new structure will, in fact, “more closely integrate marketing within operations”.

It was a surprise move from the company after it had spent two years lauding the benefits of bringing marketing responsibilities closer to its commercial strategy within a single job function.

Coke's initial move sparked a wave to similar restructures at brands including Uber, Johnson & Johnson, Beam Suntory, McDonald’s, Kellogg's, Taco Bell, Netflix and Walmart. According to research from leadership advisory firm Spencer Stuart, over the past decade, fewer companies have opted to have the CMO role at corporate level as the role lost influence with board level execs.

In 2018, Forrester Research declared that the CMO role was “fighting for survival”.

Its erosion has been so significant that the president of the World Federation of Advertisers, Raja Rajamannar, this year called for marketers to urgently "look at what they are doing and how they are doing it to connect the dots between the activity they are doing and the business outcomes in a credible and clear fashion.”

However, Coke’s admission that more emphasis was required on marketing if it was to accelerate its strategic vision (per a memo issued to staff by chief executive James Quincey) has led industry commentators to predict there will now be a “ripple effect” as more brands that were quick to abandon the title now revaluate the value it brings to an organisation.

The 'born again CMO'

"The return of the CMO role hopefully marks a return to marketing for longer-term brand building, rather than concentrating on short term returns,” said Zaid Al-Zaidy, a former senior marketer and Unilever and now group chief executive of The Beyond Collective.

“When Coca Cola dropped the CMO role it was, perhaps, due to a sense that the focus of what the job should do had been lost. Now they are reverting back, it is an opportunity to reaffirm the power of marketing in its traditional sense. Coca Cola is one of the greatest marketing accomplishments of the 20th and 21st centuries. Why would anyone think that signalling the fundamental role that marketing plays at a board level would be anything but essential?”

Coca-Cola might have argued that combining corporate strategy, customer and commercial operations and marketing under a single job was effective. Since Crespo has been chief growth officer the drinks giant has managed to turn its sales around under an aggressive agenda to turn it into a “total beverage company” that saw heavy investment into its water and coffee ranges.

In 2017, revenue was down over 15% from 2016, but that has slowly turned with it down just 10.4% in 2018 and increasing 0.67% for the 12 months ending September 30, 2019.

As such, Dipanjan Chatterjee, vice-president and principal analyst, Forrester Research was more sceptical of Coke’s decision to unbundle the marketing responsibilities from customer and commercial operations.

“In many ways, the composition of the resurrected CMO role at Coke is similar to what we’ve come to have expected at traditional brands where marketing tactics, design, creative, and sometimes insights, reported up to a marketing officer,” he said.

“What is surprising is the reversal of fortune of this particular role at Coke, which had previously evolved the position from the business of marketing to the marketing of the business. By stripping away strategy and customer-centric responsibilities from the born-again CMO, Coke will lose a vital link between traditional marketing and the connectivity to the overall business. The pragmatic explanation is that it becomes too big a job for one individual and that it is not always easy to find all the right skill sets in one person. But when you do, I believe you’ve found a CEO-in waiting."

Whatever Coke’s reasoning for the overhauled strategy, Arroyo’s job will be to show how marketing investment will maintain the positive business trajectory achieved under his predecessor.

"CMO is a tighter job role than those that also take in corporate strategy, customer and commercial operations, so it delivers better focus - which is essential for successful effective marketing,” said Greg Taylor, chief provocation officer, Elmwood.

“More focus on people whose changing needs are accelerating - people who demand more agility when it comes to creatively meeting their needs. What’s needed is someone whose number one job is to know how to stay in tune with people emotionally, to ensure their brands cut through in ways that are more meaningful, memorable and iconic. The return of CMO at Coca-Cola will help with all of this as the company executes its business strategy to go beyond colas to be ’total beverage company’.”

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