The CMO: Meeting Rising Expectations for Chief Marketing Officers
It is a tough world for CMOs. A 2006 study by executive search firm Spencer Stuart found that the average tenure for Chief Marketing Officers at the top 100 consumer branded companies was just over 23 months and has been declining over the past few years. This was less than half the tenure of CEOs, who were in their positions for an average of 54 months.
Why do CMOs seem to have a target on their backs? The expectations for CMOs continue to rise. The CMO is expected to help drive strategic growth and innovation, yet is increasingly accountable for demonstrating the financial impact of marketing investments. This has led to more emphasis on metrics and the science of marketing, in addition to the traditional art of branding and advertising.
Skills: Metrics and Strategy
Communication with other members of the C-Suite, particularly the CFO, is essential in making the case for marketing investments. Marketing has traditionally been in a separate world from finance. Now they need to build bridges. As one sign of the recognition of this need, Wharton has seen a number of CFOs and CMOs from the same company who have come to its Marketing Metrics: Linking Marketing to Financial Consequences executive program.
“What has been happening over the course of the program is that marketing executives have been bringing their finance counterparts in with them,” said Wharton Professor David Reibstein, academic director of the program. “We also have seen financial managers coming in on their own.”
CMOs need to be able to translate marketing proposals into financial measures to make a better case for their proposals. “What I hear as the number one takeaway from participants is that they can now make a better case for the projects they are proposing,” Reibstein said. “They can say: I want to increase this particular measure with this initiative, and here are the financial consequences of this move.”
Increasing Complexity
It is not just bottom-line pressures that are driving changes in the role of the CMO. Marketing is becoming more complex. With the emergence of new technologies and channels, the mass communication that defined advertising in the past has disintegrated into a complex mix of online, word-of-mouth, and traditional advertising and branding. The television screens and broadcast networks have given way to cable, computers, and iPhones.
Marketing leaders need to make expenditures across new channels, experiment with new approaches, and challenge traditional strategies. For example, while automakers spent just one percent of their budgets on online channels in 2003, consumers said the Internet had more impact on purchase decisions than magazines (which took 35 percent of spending) and almost as much as television (which drew 50 percent of ad dollars). In this changing context, marketing that could once be based upon past experience — or faith — now has to be meticulously justified.
With an imperative for growth and innovation, CMOs also are called upon to play a larger role in defining the company’s future. A McKinsey survey for the Chief Marketing Officer Summit at Wharton found that CEOs expect marketing leaders to increase contributions to growth, even while cutting costs.
Career Paths
Often the best CMOs are change agents for the organization. But change is a difficult process, attracting many enemies. This may explain the short tenures of marketing leaders such as Mary Minnick of Coca-Cola or Kerri Martin of Volkswagen.
But CMOs also need new skills. Some executives elevated to this new position did not have the experience they needed to be successful. Many CMOs still come up through a marketing career path, but they need more responsibilities and experience along the way. In a study of CMOs of major UK companies, Spencer Stuart found that the skills needed are evolving away from advertising and brand development. CMOs now need “a rare combination of leadership, creative, analytical, and financial skills.” They also need to understand other parts of the business and how marketing fits into this broader strategy.
Since large organizations often have CMOs for different parts of the business, organized by business unit or by region, these leaders can sometimes move into the role of CMO for the entire company or at other companies. As the skills of marketing leaders catch up with expectations, tenures of CMOs may ultimately grow longer, but it is a still a position that requires diverse capabilities and the ability to straddle different worlds — balancing creativity with the rigorous assessment of the bottom line.
© 2007 The Wharton School, University of Pennsylvania
> Marketing Metrics: Linking Marketing to Financial Consequences
> Pricing Strategies: Measuring, Capturing, and Retaining Value
>Competitive Marketing Strategy
> Wharton Executive Education
> The Wharton School
