Amid tight budgets, talent concerns and ongoing disruption, chief marketing officers (CMOs) are rethinking tomorrow’s marketing organization.
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Optimizing the Marketing Organization
Create a more effective, efficient and aligned marketing organization
While the turmoil of the early 2020s has faded, marketing continues to face significant disruption. Gartner’s 2022 Marketing Organization Survey captures the function as it evolves to meet the changing demands of the business.
Download this eBook for insight on:
How marketing organization structures and responsibilities are shifting
Why marketing still faces challenges around talent retention and attrition
Near- and long-term actions CMOs can take to run a more effective, efficient marketing organization
How to shape a marketing organization that delivers on strategic goals and stakeholder needs
In turbulent times, marketing organizations face enormous pressure to demonstrate measurable value. Successful CMOs equip their teams to deliver on strategic business goals and customer and stakeholder needs in three key ways: building effective organizational structures, developing top talent and determining the right mix of in-house and agency service providers.
- Design the Organization
- Develop Top Talent
- Determine Your Agency Mix
Define the most effective organizational structure to support business objectives
Geopolitical and economic turbulence create a challenging environment for marketing organizations. Pressure and uncertainty abound as enterprise costs, inflation and interest rates rise — all while the Great Resignation continues to create talent gaps.
Remarkably, marketing budgets recovered from the historic lows of the pandemic, climbing from 6.4% of company revenue in 2021 to 9.5% in 2022 — a positive indicator but still far behind prepandemic spending. To win back budget, CMOs must double down on efforts to deliver against strategic business objectives.
Balancing the needs for control and agility
For CMOs in operationally complex organizations, the drive for effectiveness and efficiency raises the question of how and where to centralize the marketing function.
Our 2022 Gartner Marketing and Communications Organization Survey revealed that 65% percent of marketing organizations have “fully” or “partially” centralized the marketing function to meet prioritization, workflow and collaboration challenges. But only 27% of respondents describe their marketing organizations as having hybrid structures — a mix of centralized and decentralized teams — that enable improved operational control while also providing needed agility.
Step 1: Evaluate the trade-offs between centralized, decentralized and hybrid structures.
When thinking about how to redesign your organization, keep in mind that one solution does not fit all — and every organizational restructure includes a degree of risk.
Centralized: Centralization refers to the concentration of management and decision-making power at the top of the organizational hierarchy to coordinate financial, human and other business resources. Strategy, planning, goal setting, budgeting and talent deployment are typically conducted at the direction of a single, senior marketing lead.
Decentralized: In decentralized organizations, formal decision-making power is distributed across multiple groups, regions or business units. Decentralization is more appropriate when marketing’s activities must be greatly adapted to support local markets or when the company must respond quickly to changing or regionally differentiated customer needs.
Hybrid: Hybrid structures use a network of centralized and decentralized teams. What to centralize or decentralize is determined based on the role and objectives of each team. Hybrid structures blend the economies of scale of centralization with the agility of decentralization.
Step 2: Identify what to centralize or decentralize.
The first step in determining the reporting structure for any marketing organization is to understand its role, scope, objectives and associated workflows. Capture this information for every marketing team in the enterprise, whether centralized or decentralized.
Based on your inventory, weigh the importance of operational efficiency, customer centricity and marketing effectiveness as you consider the pros and cons of centralizing or decentralizing the team. For example, a global VP of brand marketing would support corporate goals versus regional goals, which might support a decision to centralize. Conversely, a regional VP of marketing would need to incorporate local insights into campaigns, supporting the decision to decentralize.
Step 3: Select the best-fit operating model(s) for your teams.
Once you have determined what to centralize or decentralize, you’ll put together your network of teams to create a hybrid structure.
Shared services: Gartner defines shared services as a delivery model in which a shared services center, supported by dedicated people, processes and technologies, acts as a centralized provider of a defined business function for use by multiple enterprise constituencies.
Centers of excellence (COEs): Gartner defines a COE as a physical or virtual center of knowledge, concentrating expertise and resources in a discipline or capability to sustain or increase performance and value. The COE is focused on the development of new capabilities and provides training and scaling support for those capabilities to the distributed marketing teams.
Councils: Councils are a collective of representatives from each marketing division that meet on a regular or semiregular basis. Their meetings are used to discuss higher level marketing needs, share best practices/lessons learned and ensure any relevant consistency across the different business units.
The centralization versus decentralization decision remains a critical one. Smart CMOs carefully pressure test new structures and models before making reorganization decisions. They address the pressure points that hinder their team’s ability to scale. And they communicate organizational changes effectively to ensure the best chance of success.
Build a sustainable marketing talent pipeline
As customer journeys become more complex, CMOs must recruit and develop the associated marketing skills in their teams, while maintaining a creative, collaborative culture in a hybrid work environment. Increased competition for marketing talent and the Great Resignation add to the challenges of hiring marketers with the right skill sets.
Despite these challenges, 61% of CMOs surveyed grew their marketing organizations in 2021. Within that group, 16% reported their teams were significantly larger than the prior year. And attrition rates for marketing were significantly lower than for communications organizations — although 15% of CMOs cited a loss of 30% or more.
However, marketing team members have increasing expectations of their employers. CMOs can address these needs and improve retention by building human-centric work environments. These include flexible work options, empathetic management and intentional collaboration models beyond what the organization offers. Fifty-five percent of CMOs in our survey included flexible work options, such as location, hours, days, desk mobility at the office, work amount and even freedom to choose projects.
Maintain a collaborative, cost-effective mix of marketing agencies and providers
Budget constraints limit CMOs’ ability to grow their in-house teams. This drives continued reliance on marketing and/or advertising agencies, which account for nearly a quarter of marketing budgets.
CMOs are also reevaluating their agency mix to accommodate evolving needs. Our 2022 Marketing and Communications Organization Survey asked CMOs to rank their top 3 drivers for changing the agency mix. Skills and Experience ranked first (34%) with Adaptability, Creativity and Innovation tied for second at 26% each.
Effectively assembling and managing a roster of agencies is critical to meeting marketing’s goals. To pave the way for a smooth agency selection process, seek internal alignment on business needs and agency evaluation criteria with other business units, such as IT, sales and service, and dedicate time and resources to a collaborative, conversational agency search.
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Frequently asked questions
What is a marketing organization?
The marketing organization is the team responsible for developing, executing and measuring promotional, advertising and branding strategies that appeal to the needs of a target audience with the goal of driving sales. A marketing organization must apply a deep understanding of market trends, customer behavior, competitors and data and analytics to ensure their strategies are effective.
What does it take to build a marketing organization structure that drives growth today?
CMOs in operationally complex organizations must balance the need for control over the marketing organization with the need to respond to market changes with speed and agility. Building a growth-focused marketing organization requires knowing how and where to centralize the marketing function, while developing and retaining top talent and maintaining a cost-effective, collaborative agency mix.
What role does talent play in creating a more effective, efficient and aligned marketing organization?
Talent plays a critical role in creating a more effective marketing organization. As customer journeys become more complex, a range of new marketing skills are necessary to meet changing consumer demands and business goals. Increased competition for marketing talent — and talent’s increased expectations of employers — add to the challenge of finding the right skill sets.