Dive Brief:
- Networked marketing structures produce higher revenue growth for brands when compared to matrix organizations with top-down silos and "dotted line" reporting, according to findings from the Association of National Advertisers made available to Marketing Dive. Companies with under $500 million in annual revenue are more likely to employ the former strategy while larger companies — defined here as having more than $500 million in annual revenue — lean toward the latter.
- Even though networked structures offered 6% increase in revenue growth, only 38% of respondents reported using that organizational framework, while 62% reported using a matrixed approach or a "command and control" structure that operated under top-down silos.
- Structures based on internal functions instead of customer needs inhibit growth, the ANA found, while companies organized for growth invest more in marketing budgets, particularly in customer data management and talent. Companies organized for growth also have specific roles for lead/demand generation, content management and marketing analytics, and companies focused on the customer experience exhibit above-average growth.
Dive Insight:
Corporate organization has a visceral impact on how brands handle day-to-day workflows and also drive key business results, as the new ANA study reinforces. Highly-siloed companies tend to be more conservative in reacting to market conditions because approval has to come from the top down, which is clearly holding some marketers back amid industry headwinds such as continued digital disruption and the introduction of new technologies. Companies with a more networked structure might be more nimble, engage in more experimentation and take more chances — all higher risk activities, but also actions that can accelerate growth.
As CMOs face mounting pressures to modernize their companies internally and digitally transform their business, implementing a shift toward a more closely-knit framework might become an imperative but could prove challenging in breaking with tradition.
"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," ANA CEO Bob Liodice said in a statement made available form the trade group's 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."
To implement organizational changes, the marketing team needs to own and manage the high-impact touchpoints in the customer experience, the ANA recommended. Marketers must also own the customer data and constantly improve its proficiency. Making sure marketing talent has customer data management and analytics skills should be a priority, and marketers need to have patience during the process of changing the marketing organization.
Another interesting point from the study was that 67% of respondents report using in-house agencies, or some combination of in-house and third-party agencies, in order to cut costs and leverage their proprietary business knowledge. This compares to only 58% reporting the same in the 2013 ANA In-House Agency Survey. The more recent study found companies using both in-house and external agencies has higher growth than companies relying heavily on external agencies.