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'Term Floors' for CMOs Needed
By: Dwayne W. Waite Jr.
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In economics, there are levels known as price floors and price ceilings. A price floor means that a good or service could not be priced less than the price floor. A price ceiling is the opposite; there is a set maximum price for a certain good or service. In the U.S. government terminology, they call these "price controls," and they're used mostly for agricultural products.

While pondering this, we came across an article that stated that CMOs spend an average of 24 months at companies. It seems that once they get their system in line with the organization, they are preparing their resumes for the next stint.

Then we thought, if businesses are members of the ANA, why doesn't the ANA institute a "Term Floor Limit" for CMOs?

Think about it. With this TFL for CMOs, it will help out the CMO, the organization, and agencies that they work with.

For the CMO, the TFL will give them the time they need to find the right agency partner, bring in the right talent, and set the right strategy. They have a set minimum amount of time to do whatever they feel is needed for the brand. No pressure to perform immediately, so the CMO and their team can take the necessary time (though not too much time) to ask and answer the right questions.

For the agency, a TFL helps the shop(s) build a relationship with the CMO and the organization. Since the agency's biggest advocate in the organization will more than likely be the CMO, it is important that the two parties have some time together to figure out how they can best work together and to see what kind of work they can create.

For the organization, this can boost the image it has in the advertising community. In terms of hiring, organizations will receive better candidates because candidates know that they won't immediately have a gun to their head to succeed. They will given time to build. In terms of finding an agency partner, they will receive better RFP responses and will have better conversations with agencies. Shops want to know that the people who they'll be working with will be there for a while, so an organization that emphasizes stability will beat out those who support the burn-and-churn. And lastly, if the system works, the organization will get better advertising and better advertising results. The bottom line increases, the customer base is pleased, and everyone wins.

The question, then, is: What is the right amount of time for a Term Floor Limit for CMOs? With the kind of advertising we see now, if the average time is two years, that isn't enough. For the experiment's sake, let's add another year to the average and say three years for a TFL (ideally we'd like to see five, but we're trying to make this realistic). That gives plenty of time for the CMO to assess the situation, see what was done in the past, put in their system, run their system, and start to see results.

In an ROI-driven environment, organizations may scoff at the notion of giving a CMO three years right off the bat. But they should know that doing that could help them bring in better people who would produce better results.


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About the Author
Dwayne W. Waite Jr. is partner and principal at JDW: The Charlotte Agency, a marketing and advertising shop in Charlotte, NC. He enjoys consumer behavior, economics, and football.
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