Wednesday, August 22, 2007

Marketing At a Crossroads

Now that I'm nearly two months into my role as President of the Cincinnati Chapter of the AMA, I'm beginning to see that the marketing profession is due for some self analysis. This is never more evident with a recent report from the University of Texas about the impact of CMOs or Chief Marketing Officers. Read below....

BOARDROOM MARKETERS' NIL IMPACT ON FISCAL PERFORMANCE: REPORTAUSTIN, Texas: In what some see as a setback to the ANA's campaign to elevate the marketing function to the top of the corporate hierarchy, a new report from the University of Texas infers that the impact of chief marketing officers on their employer's financial results is ... zip, zero, nil or nix! The January 2008 issue of the American Marketing Association's quarterly Journal of Marketing is due to carry a controversial new report, Chief Marketing Officers: A Study of their Presence in Firms' Top Management Teams.It posits that the presence of a CMO in a company's senior management cadre has no effect on that firm's financial performance The review was conducted over a five year period with 167 top companies (among them Procter & Gamble, Microsoft, IBM, Intel and Apple), all with minimum annual revenues of $250 million (€183.47m; £124.26m). It disinters the longstanding debate on how best to measure marketing performance. Should CMOs be evaluated on tangible or intangible metrics?By unassailable statistics such as sales? Or on more nebulous concepts like brand equity or consumer awareness? Even the report's authors are hesitant to draw conclusions and concede that their study is limited because it concentrates on financial metrics like sales growth and profitability, whilst ignoring key factors such as brand equity. Vijay Mahajan, a professor in the department of marketing at the University of Texas and co-author of the report, agrees that the financial metrics used to measure the performance of CFOs and CEOs have less relevance to CMO role. "Those [weightings] are very short-term," says Mahajan. "You cannot use short-term metrics to measure the performance of someone who is supposed to have a long-term impact." But despite that qualifier, the report's findings will do little to enhance the status or influence of marketers, especially in medium-to-smaller companies where Byzantine concepts like brand equity are rarely bandied in boardrooms. Less than half the companies studied (40%) had a CMO in its top-management team - versus 92% with a CFO aboard. The actual title CMO is uncommon, used only by circa 20% of companies. And it will be of scant comfort to marketers that the report concludes that CMOs do no harm: "It is important to note that CMOs do not have a negative impact on performance," it opined. Data sourced from; additional content by WARC staff, 10 July 2007

While it's too early to sound the alarm, I think that marketers in general need to take these opinions seriously. I sat in on an webinar yesterday entitled Marketing ROI: 10 Strategies for Winning Over Your CFO and other Marketing Skeptics. I had to slip out early but the general sense conveyed was that other C-level executives in our organizations outside of marketing are looking for return on investment for everything done. No big suprise there. As a result, credibility needs to be established early in the process with such factors as alignment, a comprehensive measurement system, objectivity (marketers tend to be overly optimistic) and accountability being central. Much of this begins as companies reflect on the role of marketing and decide on its purpose for their particular situation.

On September 21, the Cincinnati AMA will launch its 2007-2008 season with a luncheon at the riverfront Radisson Hotel in Covington on the challenges faced by CMOs ( Many of these issues will be discussed and debated. Hope you can attend.

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