Coca-Cola Global CMO Manolo Arroyo, Page 2

GS: This is Building Better CMOs. Let's get back to my conversation with Manolo from the Coca-Cola Company.

Let's shift here. Let's go to the fun of Building Better CMOs. Okay, so you know the question that's coming. It could be asked a couple of different ways: What do we think marketing or marketers don't fully understand or appreciate?

What don't they know? I get that every once in a while. What do you think that we don't spend enough time trying to figure out? What leaves a gap or hole in our ability to operate effectively in the companies that we're in? Like any way you want to approach that. I'm a nonprofit here to make marketing, CMOs stronger.

That is the point of the podcast. That is the point of the whole MMA and everything that we do. So the advice that you would have for marketing, or what's your input to what you think that you just, you don't know if we appreciate enough or spend enough time to figure out. Let me let you go on that for a little bit there.

MA: I'll start with data, and there are multiple data points out there that you can find easily. Whereby roughly, I'm just averaging all of them out, around two-thirds of the CMOs today feel or don't, in reality, have the full support and trust of their CEOs and/or their boards of directors.

GS: This data came out just recently. I saw it published again. Yeah.

MA: And maybe because of the position, I've got quite a few peers that kind of reach out and say, "Hey, Manolo, I'm going through some of this. How are you dealing with that? How did you deal with that at the beginning of your journey?" And I think -- with the benefit of having spent more time out of marketing in operating roles as a GM or CEO of different parts of our business or in other companies, more time on doing that than actually marketing -- it's up for the CMOs to change that. No one else is going to change that.

GS: Yeah. So we need to own responsibility.

MA: Absolutely. It starts by looking yourself in the mirror

GS: You have to.

MA: And start to really think about what would it take, or what would I need to change and do differently to really start to think as a CEO or as a director in a board? What are their drivers? What are their motivations? What are they expecting from marketing?

And obviously part of the discussion is engaging with them and genuinely listening to what they feel is the priority for the business. Now, out of that, what I can tell you is a few observations. I have found quite a few CMOs that maybe have not had the experience as an operator or as a COO, as a GM, and sometimes they struggle to understand the nuances that are requiring full understanding of the P&L or the balance sheet or the cash flow limitations of any given corporation. And that is an initial point of contention that starts to derail the whole thing. And that's definitely one component. So financial, deep financial acumen is a starting point. That's one. The second point I've also found as a pattern is that there's already a perception out there, whether we like it or not, about CMOs by other functions, CEOs, and boards of directors.

And that perception is a lot of times we try to drive in marketing our own agenda that is not a hundred percent compatible with the agenda of the large corporations. So my invitation for a CMO would be just make sure that you really start to think cross enterprise. Your priority is to drive a cross-enterprise thinking way before you drive your own function, i.e. marketing, specific objectives. And to the degree that you lead by example, that everyone -- your peers in the management committee -- see that you put ahead the agenda of the corporation, of the company, way ahead of your own individual agenda in marketing, that will go a long way. And that requires a lot of paradigm shift.

It is normal and natural, like in any other profession, that the strong, solid CMOs have strong opinions, strong points of views. But with the strong opinions and strong point of views, in my experience, you always bring also paradigms. You also bring a degree of convictions that are absolute truths, and I've learned through my experience that there's nothing absolute in business. Not black or white. It's all gray and all the degrees of gray. So a lot of times I think the secret to really be an effective CMO is to move from a know-it-all mindset and ensure that the whole marketing organization moves out of that mindset of 'I know it all' to 'I learn it all.'

To really be driven by curiosity, be driven by the need to learn and be connected to the consumer and to the outer world on a daily basis. That is what is the first step to get you into a successful place.

MA: For us at Coke, the way we have defined the role for marketing is really about driving growth.

Our main role in the corporation is to ensure that we support the business leaders, the CEOs and COOs of the different parts of the world, to be very successful in increasing in driving growth, both top line and bottom line. And as our purpose says, it's also about making a difference and giving back to communities and making a difference around important topics like diversity. So it's not either or, you've got to drive both. And actually everything comes under the umbrella of growth. That's basically the way I would invite you guys to think about growth. That way, at least in my own experience at Coke, we've found we are right now in a fascinating moment of our history, whereby marketing is definitely, again, sitting at the top of the table, driving the agenda, the growth agenda of the company with tremendous credibility, with the rest of the functions in the company, with our bottling partners around the world. By no means we're done, and we are even half of the pathway we should be, but we're definitely living a very inspiring moment for everyone that works in marketing at Coke.

GS: Do you think if we were to talk to the other marketers, do they really understand that marketing is about growth? Have they adopted that as their sort of mantra, their North Star? Do you think they all get it? Or do you think we still even have work to do, even within Coca-Cola to do that? Like I hear you get it, which is unusual by the way.

MA: For me, obviously, in a very diverse organization -- we have more than 2,000 marketeers -- you have, again, all the degrees of gray. Some professionals, they are only driven by their own individual passions and some of them have tremendous passion for only one or some components of the marketing spectrum.

I think what definitely has helped to galvanize everyone in the marketing community at Coke is the existence or a transformation driven by metrics.

GS: Okay. I've heard that there. Yeah.

MA: Because metrics do matter. And we're driving, basically, there are multiple, but there's one over and above the rest. And it's one single metric and everyone knows that's what we're looking for.

And anything that is not aligned with that metric, it will be a very hard sell because it's not going to really add meaningful value to our business.

GS: By the way, I have heard that. So I was in Vietnam last year for MMA and I met with the Coca-Cola executives there, and that's what they talked about. And I know your team in APAC is trying to rethink how you do measurement, which we've tried to be supportive of. So it's funny you say that. I do hear that very clearly.

Manolo, what you're saying is interesting. I tell this story a lot. I've told it here. So apologies to the readers, but I had a closed door meeting with a bunch of CMOs as the MMA was becoming a CMO organization about seven years ago, just by the time I got working with Omar. In fact, oh, I'm sorry, Omar was in the room with me.

Just to set the stage, CMO of General Motors, T-Mobile, Chobani, Allstate, Dunkin, big CMOs, right? All in the room, closed door. And Omar threw out a warm-up question. Ten minutes, this was supposed to be ten minutes, just to get us going, right? Wasn't even what we were there to talk about. He said, "What is the role of marketing, what is the role of the CMO?"

You can guess what happened, Manolo. One hour later, we realized nobody in the room agreed. Not one person had the similar vision. So if we're not consistent in what we think we're about -- and I do believe the answer is growth, that needs to be our singular first answer -- if we're not clear, how do we expect the boards, the CFOs, the CEOs to appreciate what we're doing if we're not aligned at some very basic level set?

I think that's where we're lost a little bit as a function. Yeah.

MA: Correct. And I think, if you really think about growth, it's the fuel of any organization. When there's no growth, you know what's going to happen next.

GS: People aren't getting their bonuses is one thing that's going to happen.

MA: That's only one, but then restructurings and all that kind of stuff. But when you are single-minded focused on driving and accelerating growth, even if you're doing really well -- 2X, 3X, whatever is your current momentum -- and you align everyone towards that, then the role that marketing plays will fall in its natural place for everyone.

GS: Marketing goes to the head of the class and leading the company, back to your earlier point about leadership when we focus on growth, because we're the one group that does have some input and real control and budgets to support that, typically. I know it's not enough, that's a whole different story. But if we don't align there, I totally agree.

Very interesting. I don't know if I've heard anybody be so crystal clear about that. So you have the unique experience of having been... how many countries have you worked in for Coca-Cola? Give me a number.

MA: Living for years, five for Coke and one outside of Coke, but that's living. Yeah.

GS: And that's a business leader role, which means you're in there as a general, I don't know what title they give, a general manager. You're running the P& L, and listen, it's a very marketing-predominant part of your day, I'm sure. But you're still a business leader, thinking about P& L and teams and resources to manage up.

So you have a unique experience. Not every marketer gets that. In fact, Coke has done that a couple times now. They have taken country leaders and made them CMO, haven't they? They've done that a couple of times, I think I've seen.

MA: Correct. It's happened before, at least that I know three or four times in our history.

GS: It used to be that Coke brought marketers up to be CMOs, but now they've changed the dynamics. Okay. So obviously the company, you're falling in line with that thematic where they're going.

GS: What advice do you have for CMOs who don't have that?

How do you get aligned with the CFO? How do you learn to talk the language? Do you have any advice for somebody who didn't have the experience you've had? Or go get it, maybe that's your advice.

MA: If you don't have it, you're going to need to go and get it for sure. Okay. But that doesn't mean necessarily changing the role, but what I can tell you is what I did in my first week. So the first thing I did in my job -- I don't remember if it was day one or day two, but it was not more than that -- is the CFO of the company and myself, we went for lunch.

And we had a phenomenal time exchanging views, perspectives about the work that we needed to do together over the coming years. And that lunch continued with a meeting the rest of the afternoon. And we committed to each other that we owe it to our great company, making sure that the marketing and the finance function would work at the level of collaboration and closeness together never seen before. And I think when the leaders of the rest of the organization see the leaders doing, behaving, and acting in that way, everyone follows. A lot of the great successes that we're seeing now today, almost five years later, they started because of that commitment, that mutual commitment, which is still... actually, I was a little bit late into this call because of another great session with John, with our CFO.

It's so important. I can't underscore how critical it is, because if you want to know, if you want to estimate, if you have an idea -- at least a range, if you don't have an exact number -- of how much value we create in our roles for a corporation, there's no better partner to help you put a dimension to that than your CFO.

GS: Yeah. Listen, she or he has the access to the treasury at some level. I'm overusing those terms, not properly or exactly right. But they have access to the treasury. Their job is to look for places to investment. We tell a story internally a lot because we've done a lot of work with Omar and others around this and some other work that we're doing about how the CMO talks to the CFO.

We have a story, you're going to love this. It's called carpeting, not marketing. Let me explain what that means. We happen to have a bank executive on the board who, one year, lost $100 million in marketing money because the operations people at the bank, at the branches, in charge of the branches, had figured out the return on investment of installing new carpeting.

So marketing lost to carpeting. Carpeting was a better return on investment than marketing. That's very sad. That's very sad. We tell that as this is our bottom story. This is where we don't want to get to.

MA: It can't get worse than that.

GS: Can't get worse than that. Okay, but hey, go back.

Listen, this is a hard question, obviously. No proprietary information here. But are you able to illustrate in any way the conversation you would have in using some of the terms that the CFO does? Cash flow and what to do with excess cash? How do you tune what you're doing?

We tend to talk in likes and viewable impressions and silly stuff that doesn't matter to anybody but us. So how do you switch that conversation with a CFO?

MA: There are multiple dimensions in which that comes to life.

GS: That's a very open-ended question. So just riff on that for people a little bit.

MA: I come from a place that might not be that popular for other CMOs. Let me give you an example. I've seen a good three-quarters of marketeers, regardless of their level, their training, or their origin -- where they come from in terms from other companies -- that they come with an ongoing position that the amount of marketing dollars that they have is insufficient, and therefore I need more marketing.

Leaving aside the amount of marketing that we have at Coke, which is obviously, it's not public, but it's a sizable budget. I can take two approaches, and these are real approaches, okay, and they are available to me. If I benchmark our level of marketing to most other companies out there, anyone would say, "Oh, that's nothing. It's not enough. I can't do a proper marketing given the size and the scale of this business with that amount of dollars." There's a separate way of looking into that, which is the fact that, for example -- like many other big companies, as you probably know and are aware of, there's public data out there -- the level of full viewability of digital marketing investments, digital media investments, hardly reaches 55 percent. Should I go and ask for more marketing dollars knowing that half of those dollars are going to be basically paid but not fully viewed by my intended target? Let me make it even more complex.

If we know -- and you probably were a big part of that many years ago -- that the variable of quality messaging versus quantity can be, depending on the segment, the category, the market, but anywhere between seven to eight times more important than the dollars. If you get the right messaging, if you hit on the nail that drives the conversion of a non-consumer into loving and consuming your product, that is worth seven to eight times in dollars.

GS: Can be. Absolutely.

MA: If you are a business leader, as opposed to just a CMO, why wouldn't you focus first in getting your quality levels. And I know it's not something that you can guarantee to go from a three to a six or a seven. The easier way is to just go to the CEO, the CFO and say, "Oh, I got inflation in media of 10 percent. Therefore I need 10 percent more dollars." No. And you obviously find great CMOs out there that understand this intimately, but I find more, many more marketeers that have less interest in driving that, because that involves putting for yourself goals that are more stretched. It is more difficult to guarantee and condition your annual incentive to significantly increasing the quality of your marketing or changing or understanding what do you need to change in the digital supply chain. So your full viability is different. Those are just a few examples of some of the conversations we've had at Coke for, not only for today or recently, but for years.

GS: One of the CMOs on one of the episodes here had written a thesis. They had a background as a chemical engineer. Funny background, but a science background. Okay. She goes, "I find so many marketers start with how big a budget I have and how big is my team. Rather than, what's the hypothesis we're trying to prove and how well can we measure that hypothesis to success?"

That's what a science person does versus something else. Yeah, isn't that smart? I thought that was really good. I had not heard that a lot. It really caught my attention when I did. Listen, I heard the tension between long and short about four or five years ago, right? How do we do that?

And basically what the question was, what is the value of brand? But we said, no, what if brand had to be performance? Because it does need to be over time. Over time, brand needs to produce sales results, correct? Do we agree with that as a thesis?

MA: That's my starting premise. I don't separate brand and performance. That is something I've heard across the industry, but I really struggled to say there's some marketing dollars that drive performance and there's some marketing dollars that drive brand. It's like what are you talking about? I don't get that.

GS: Okay. So our study series is called Brand as Performance. Okay. So I think I've stitched back to where you were. Okay. So what was interesting about that question is first off, there is no methodology to measure the long-term sales impact of brand. That's crazy. Our business is 150 years old and there have been no methods.

And by the way, I've asked that question now to 200-300 CMOs and nobody's come up with an actual methodology. So we built one. And we've now been doing a series of studies, Campbell's, AT&T -- we've not come out with yet -- Kroger's, Ally, so we're starting to get a body of information that, against this methodology, we can measure the long-term sales impact of brand, how it converts to favorables, for one, and then how favorables often convert to sales.

Do you think you have enough clarity at this point about what is the sales impact of brand over some period of time, or do you think you could use that information to greater value? Or here's an interesting one: do you think you'd have an idea of what it would show us about brand versus short-term sales, typically, short-term performance buying media strategies? Too many questions?

MA: No, I understand the questions and it's actually a topic that's big, very close to my heart. I love it. As opposed to direct-to-consumer businesses, every CPG, as you mentioned before, has been in this journey now for decades. To really understand or to really get to a model or a series of models that would allow to really measure, specifically, the value coming from marketing, both short and long term.

MA: I think we at Coke -- like many other companies, many other CPGs -- have had decades of experience working with MMM, MBA modeling, et cetera.

GS: MMM would give you a sense of that.

MA: I still remember at some point of history, I remember we were getting with 160 different models trying to measure every single variable, controllable or noncontrollable, that could impact our business.

I think in our case, our experience is that back then, when we were doing that more than a decade ago, the computing power, the resources required, the level of or the lack of an existence of AI, and a very different media engagement scenario -- which was not a hundred percent, but almost close to a hundred.

Traditional TV led to a place that it was very challenging. We had good approximation at macro level -- not at micro -- but a macro top-line view of roughly the impact in the long term versus the short term of different options of investment in marketing. The challenge back then, that is still the case today, is that no one had understood or had been able to quantify the multiplier effects or the divider effects between any of those 160 variables, because it is different. The multiplier effects will be different if you take in combinations of 2, or 3, or 4, or 5, so on, up until and equal to 160.

The same thing for divider effects. And any campaign, any marketing program, even for the same brand, just the next month can have multiplier and/or divider effects. And you don't really know because the quality component of the content can dramatically transform from positive to negative or the other way around.

What is different today is a combination of the world having moved to a digital-first digital marketing engagement model, primarily. Second, that level of computing power. Third, the fact that AI methodologies will allow you to digest, process, consolidate data at a whole different unprecedented speed. And then the ability to combine first-, second-, and third-party data.

And I think for the most part, down to almost the case -- because today, a lot of companies have some degree of modeling and projections that distinguish short versus long term -- but down to the transaction at the individual transaction level, it will still take a few years, not many, though, to get there.

I think we are going to be very close to see something that really involves a revolution in the science of marketing moving forward.

GS: I love that. There's so many naysayers that say, "Oh, it's just getting worse and worse." But no, I think there's hope on the horizon. I think I agree with you. You know what's interesting? I heard a data point that really concerned me. So listen, I'm a big fan of multi touch attribution. I helped co-create that methodology back in the early 2000s with a guy named Rex Briggs.

And what was interesting, I checked in with him recently. He's now sold off his company, so he has no dog in the fight. And I said, "So where are we? Are marketers adopting MTA?" And it's about 50 percent of marketers have that, which MMA thinks is the answer. Okay. Here's what's interesting. I said, "What do you think is the biggest challenge with it?"

He said, "I believe my teams tell me that only 10 percent of our clients are actually executing against the MTA work that they had." Even when they start to get the data, believe it or not, there's a secondary issue about quality, it's relinkage to sales. There's a lot of complexity to be resolved that can happen in this environment.

We still don't get the information fast enough. What you just said is maybe we will get the information fast enough and better quality. That's a very inspirational point.

MA: I still remember a time in which the experts were trying to combine all of these models and we didn't have enough memory in the computers to be able to deal with all of that. So you would need to go at a different speed. You would get the data two, three months after when it was too late to react.

GS: It's good learning, but not helpful in the broad scheme of the world and optimizing.

MA: That is changing as we speak, very quickly.

GS: We're actually doing a bunch of experiments now with machine learning, AI personalization, or personalization of creative, I'd say, using AI machine learning. In that case, the machine is making decisions far faster than a human being could even come close to and reacting to it and then finding a proportion of it that makes sense, which is, I think, one of the hopes of AI.

GS: Hey, listen, Manolo, this has really been incredible. I can't tell you how enlightening this is for me to hear. I don't have a finance background, but I believe in everything you just said. And I do think that is the answer, that we need to start acting as business-- I want to be careful because I don't want to denigrate the work that's come before.

Cause you're right, that X-factor comes from someplace else. But talking the language of business just more, we've got to put it back in those terms. And I think I mentioned it to the board, asked the MMA to work on that. And we think we have the answer. We think we do and we're going through a testing scenario. By the end of this quarter we should have more insight to that. So listen, I didn't mention it earlier. I'm going to close with this, though. I'm going to thank you and Coca-Cola again. The listeners won't know, but the MMA was really built on the backs of Coca-Cola. In fact, there was a Coca-Cola marketing executive who was the chair of the organization back in its early days in 2007, I think that's what it was. And Coke gave a lot of support to the MMA over a lot of years. And we, as an organization, wouldn't be who we are if it hadn't been for Coke stepping in at those pivotal moments and really helping us to get to this point. And now we're going to go fix marketing. So hopefully we pay it all back.

MA: Awesome. Thank you, Greg. It's really a pleasure.

GS: Manolo, you're the best.

Thanks again to Manolo Arroyo from the Coca-Cola Company for coming on Building Better CMOs. Check out the description of this episode for links to connect with Manolo. If you want to know more about MMA's work to unlock the power of marketing, visit mmaglobal.com, or you can attend any one of our 44 conferences in the 16 countries where MMA operates, or just write me greg@mmaglobal.com.

Now, thank you so much for listening. Tap the link in the description to leave us a review. If you're new to the show, please follow or subscribe on Apple, Spotify, Amazon, iHeart, or wherever you get your podcasts. You can find links to all those places and more at bettercmos.com. Our producer and podcast consultant is Eric Johnson from LightningPod.fm. Artwork is by Jason Chase. Special thanks to Angela Gray and Dan Whiting for making this happen. This is Greg Stuart. I'll see you in two weeks.