Coca-Cola Brings Back CMO Position: Why it Could Cause a Ripple Effect
Just two years after ditching the role of chief marketing officer, Coca-Cola is making an unexpected about-face.
When Coca-Cola retired its CMO position back in 2017, it set the trend for companies around the world, with many recasting the job to reflect the broader range of skills and responsibilities needed. Some followed Coca Cola’s lead by adopting the chief growth officer label, and others opted for job titles like “chief experience officer” to better reflect the shift in the way we think about this role. Uber, Johnson and Johnson, Taco Bell, and Netflix are among the many prominent brands that eliminated the title in recent years. According to estimates by leadership advisory firm Spencer Stuart, about 70% of large companies have CMOs at the corporate level, down from roughly 74% in 2009.
But now, that could be set to change again as Coca-Cola is in the process of reversing the decision just two years after the initial shakeup.
Clearly coming to regret their initial move, Coca-Cola is resurrecting the position of CMO. Manuel “Manolo” Arroyo, who has been with the company for 24 years, is set to pull double duty as he assumes the role of global CMO and retains his current position as president of Coke’s Asia Pacific Group.
Why Coca-Cola Ditched the Title of CMO
Let’s set the scene: The year is 2017, and Coca-Cola’s global chief marketing officer, Marcos de Quinto, who successfully oversaw the popular 15-month “Taste the Feeling” campaign, is set to retire.
As part of a large-scale restructuring, Coca-Cola announces that the title of chief marketing officer will be retired with de Quinto and that the responsibilities of marketing, and customer and commercial leadership strategy would be consolidated into one combined function led by a chief growth officer.
As consumers were becoming more health-conscious about the negative effects of soda, Coca-Cola was beginning to position itself as a “total beverage company,” launching new products like Fuze Tea that had a healthier public image.
James Quincey, Coca Cola’s chief operating officer, emphasized the “total beverage company approach” at the February 2017 Consumer Analyst Group of New York conference, stating, “The brand Coca-Cola will always be the heart and soul of the Coca-Cola Company, but the company has outgrown its core brand. The company needs to be bigger than our core brand.”
The company clearly saw the value of the “Taste the Feeling” campaign that de Quinto started and decided that it would continue under the new chief growth officer, Francisco Crespo, as an embodiment of the “one-brand” approach. However, they were also concerned with how their overall marketing would adapt to the new approach.
Speaking with Marketing Week back in November 2018, the company’s global vice-president of creative, Rodolfo Echeverria defended the decision:
We have always been big but now we are obsessively pursuing growth not in the sense that we want to be richer but in the sense we are looking at those consumers who are not our consumers right now. We’re asking how can we grow? How can we satisfy more and better consumer needs?
When you have the boss whose job title is growth officer then you have to come up with growth in terms of new consumers who love the brand more, are buying Coca-Cola more frequently and have a high appreciation for the brand value.
However, just two years later, the tide is turning once again.
The Revival of the CMO
Chief Growth Officer Francisco Crespo is set to retire later this year, at which time, Arroyo will officially take over marketing duties and assume the role of chief marketing officer. The corporate strategy and customer/commercial operations responsibilities previously held by Crespo will divided between Coke’s chief financial officer and chief operating officer.
The hope, as stated by CEO Quiney, is that Arroyo’s dual position will more closely align operations and marketing:
We know consumer needs are changing faster and faster, and it is critical for the company to be agile in how it responds and adapts. Manolo’s dual leadership over operations and marketing is a new structure for us, and we anticipate that it will evolve in the months ahead. Manolo’s focus will range from developing work that can be used around the globe to supporting local campaigns.
So far, the strategy under CEO Quincy’s leadership has been largely successful, with the company posting 5% organic sales growth in the third quarter, largely due to variations in Coke’s flagship soda brand such as Coke Zero.
However, according to a staff memo provided to the Wall Street Journal, Quincey has expressed concerns about the current marketing trajectory. In the memo, he praised Crespo’s strong framework for growth around the company but noted the need for the company to put more emphasis on marketing to accelerate its vision.
Others are taking notice, and many in the industry are predicting that the company that originally started the trend of ditching the CMO could now send a ripple effect in the opposite direction as more companies realize the need for a tighter, more focused marketing strategy.
The role of CMO is much narrower than that of a chief growth officer, with CMOs mainly overseeing the planning, development and execution of their organizations’ marketing and advertising initiatives. They’re focused on the big picture of how the overall marketing strategy is working to generate revenue. They must be both analytical and creative. While building the framework is important to growing the brand to better encompass and unify Coca-Cola’s vision of a “total beverage company,” you need to have someone who understands marketing at the executive table.
The return of the CMO will (hopefully) mark the renaissance of building long-term brand loyalty rather than the obsessive focus on short-term gains. After all, Coca-Cola’s advertising has been an iconic part of American life since the early 1900s and has been essential to its success. Uncoupling marketing responsibilities from corporate strategy could be what the company needs to reconnect with its fans and react more quickly to meet their needs.
A brand needs to spark memorable, meaningful relationships with their audience, and as Coca-Cola pursues its vision in becoming a “total beverage company,” those connections will be more important than ever.