Dive Brief:
- Despite a high correlation between a strong CEO-CMO relationship and business growth, there remain several disconnections between the C-suite functions, per a new survey by McKinsey & Company.
- The research points to a “murkiness” in who is responsible for marketing in the C-suite, a lack of knowledge about the increasingly technical, data-driven world of marketing and a misalignment between marketing measurement and business impact.
- The findings come amid a rise in new C-suite roles — chief growth officers, chief customer officers, chief brand officers and the like — with responsibilities that have been traditionally assigned to chief marketers.
Dive Insight:
CEOs who prioritize marketing stand to improve their bottom lines, per the McKinsey research. B2C companies that do so are three times more likely to achieve greater than 5% revenue growth and B2B companies are more than twice as likely to do so. Still, the survey — based on conversations with more than 100 people in C-level growth roles and 21 CEOs from B2B and B2C companies of different sizes and across industries — revealed a disconnect between CEOs and marketers.
While CMOs were traditionally responsible for the “4Ps” — product, price, place and promotion — these aspects of a business are increasingly managed by other executive roles, such as chief growth and chief brand officers. Less than a third (32.7%) of companies have one role reporting to a CEO that’s focused on growth and customers, while 30.7% have two and 36.6% have three or more such roles, per CMOs surveyed by McKinsey.
McKinsey also found a gap in the understanding of marketing’s remit between chief executives and chief marketers. While nine in 10 surveyed CEOs believe the role of marketing is well-defined, only half of CEO-CMO pairings gave the same answer on the topic. Thirty percent were in agreement that marketing sets the “North Star” for a brand and its reputation, 15% were on the same page that marketing uses digital tactics to drive business results and 5% were in alignment that marketing delivers a “world-class” customer experience.
Contributing to the disconnect is an unfamiliarity with the shape and scope of modern marketing, with only 10% of Fortune 250 CEOs having marketing experience, according to McKinsey’s estimates. Most CEOs are not familiar with the increasingly technical, data-driven discipline that has seen the number of martech solutions double every year over the past five years, per McKinsey. About half of surveyed CEOs said they felt comfortable with modern marketing, while two-thirds of CMOs said their CEOs were not.
Similarly, there is a gap between CEO and CMO understanding of metrics that are essential to the work of modern marketers. Only half of CEO-CMO pairings agreed on their company’s top three marketing metrics, with CEOs focused on revenue growth and margin improvements while CMOs focused on brand awareness and recognition.
To close the divide between CMOs and CEOs, McKinsey suggested several solutions. First, CEOs and CMOs must clarify the marketer’s role, appointing a C-suite level role that brings together the focus on customer-centric growth across executive leadership. CEOs must better understand how CMOs can contribute to growth and also allocate more time to learning about marketing innovations and shifting consumer behaviors. In addition, the C-suite must outline a marketing measurement framework that everyone understands, focusing on outcomes and not just marketing activities.
The report comes as Fortune 500 CMOs continue to see their average tenures decrease, down to 4.2 years in 2022 from 4.5 years the year prior, per a recent study by Spencer Stuart. The average tenure for the top 100 advertisers was 3.3 years. Meanwhile, major marketers including General Mills, Disney and Mars Petcare have appointed chief brand officers in recent years.
