Is Ad Fraud Impacting CMO’s Performance?

Is Ad-fraud responsible for shrinking CMO tenure?

With digital spends cross over 50% of the total media spends, inefficiencies like ad-fraud will hit their potential as well as the performance.

Recently, executive search firm Spencer Stuart revealed an interesting insight about the shrinking tenure of CMOs reaching to 40 months, lowest since 2009. In sharp contrast the tenure of a CEO reached an all time high of 80 months. So, one wonders what’s going wrong with CMOs when the ‘captain of captains’ – CEO is stable.

The answer perhaps lies in the fact that Ad-fraud is not only impacting the marketing spends but also adversely affecting the performance of the CMOs as well. We have already entered into the third era of digital marketing where it is now more than 50% of the total market spends across various mediums.

As the digital spending as a percentage of total media spends keeps on increasing, any inefficiency or weakness in the value chain will not only restrict but retard the growth. Overall, ad-fraud and adjacent inefficiencies waste 6-9% of the total digital spends, while on performance marketing it results in almost 30% spends without any returns.

Tracing the journey of our clients, we have noticed how the digital marketing mix is switching in favor of performance marketing than brand marketing. Some 3 years back, performance marketing would constitute just 20-25% of the total digital marketing spending, which is now in many cases over 55%. So even if for argument’s sake, we say that ad fraud only happens in performance marketing, its impact on the overall digital spending is only increasing. This is nothing less than a nightmare for any marketer including the captain – the CMO.

In digital, the results should be delivered in real-time. At the same time, many CEOs are still catching up with the nuances of digital. This sets off wrong expectations when they see results not coming up quickly as is inherently attached with the digital. As a result, CMO has to take responsibility.

For the CMO, it will take some time for the entire CXO suite to understand that even in digital things don’t happen overnight and in real-time. However, what definitely can be plugged in is the inefficiencies that ad fraud results in. Otherwise, the CMO is going to be questioned every time inside the boardroom as well as otherwise about the return on ad spends over digital. By taking cognize of ad fraud a CMO can instantly reduce wastes on performance marketing in the range of 25-30% translating in improvement in overall return on digital marketing by another 6-8 percent points.

CMO has become a change agent as well as a business officer with digital getting more prominence. A CMO today not only drives return on marketing but also brings in leads, sales, and eventually revenue. So if there is no clean and safe medium to market digitally, the results will always be interpreted as underperformance of the function as well as the individual. This is what will continue to create turbulence in the marketing functions of any organization and we will see CMOs departing the CXO suite more often than any other CXO.