Do CEOs Comprehend Contemporary Marketing? 66% of CMOs Indicate Otherwise
CEOs need to understand modern marketing to effectively lead their organizations However, 66% of CMOs believe that CEOs lack this understanding McKinsey suggests that CEOs must define roles and establish measurement frameworks to address this issue
Article Brief:
A recent survey conducted by McKinsey & Company reveals that despite the significance of a robust CEO-CMO relationship in driving business growth, there are still various gaps and disconnects within the C-suite functions.
The research indicates a lack of clarity regarding marketing responsibilities, insufficient understanding of the evolving technical and data-focused nature of marketing, as well as a disconnect between measuring marketing efforts and their impact on business. These findings coincide with the emergence of new C-suite positions such as chief growth officers, chief customer officers, and chief brand officers, which have historically encompassed responsibilities typically held by chief marketers.
Article Insight:
CEOs who prioritize marketing, according to McKinsey research, have the potential to enhance their bottom lines. B2C companies that prioritize marketing are three times more likely to achieve revenue growth exceeding 5%, while B2B companies are more than twice as likely to do so. However, the survey conducted with over 100 individuals in C-level growth positions and 21 CEOs of B2B and B2C companies of different sizes and industries highlights a disconnect between CEOs and marketers.
According to a survey conducted by McKinsey, the traditional responsibilities of CMOs, which include product, price, place, and promotion ("4Ps"), are now being handled by other executive roles such as chief growth officers and chief brand officers. Less than a third (32.7%) of companies have one role reporting directly to the CEO that focuses on growth and customers. Meanwhile, 30.7% have two roles, and 36.6% have three or more roles dedicated to these areas.
McKinsey's research also revealed a discrepancy in the understanding of marketing's role between CEOs and CMOs. While 90% of surveyed CEOs believed that marketing has a well-defined role, only half of CEO-CMO pairs agreed on this point. Specifically, 30% agreed that marketing sets the "North Star" for a brand and its reputation, 15% agreed that marketing utilizes digital strategies to drive business results, and only 5% agreed that marketing delivers a top-notch customer experience.
Adding to the disconnect is a lack of familiarity with the extent and nature of modern marketing, as per McKinsey's estimates, with only 10% of Fortune 250 CEOs possessing marketing experience. The majority of CEOs are not well-versed in the increasingly technical and data-driven field which has witnessed a doubling of martech solutions every year for the past five years. McKinsey states that about half of the CEOs surveyed expressed confidence in modern marketing, whereas two-thirds of CMOs stated that their CEOs lacked familiarity.
Similarly, there exists a discrepancy between the understanding of metrics essential to the work of modern marketers held by CEOs and CMOs. Only half of CEO-CMO pairs agreed on the top three marketing metrics for their company, with CEOs primarily focusing on revenue growth and margin improvements, whereas CMOs were more focused on brand awareness and recognition.
To bridge the gap between CMOs and CEOs, McKinsey proposed several solutions. Firstly, it is important for CEOs and CMOs to clearly define the role of the marketer by assigning a C-suite level position that focuses on customer-centric growth across the leadership team. CEOs should also gain a better understanding of how CMOs contribute to growth and allocate more time to familiarize themselves with marketing innovations and evolving consumer behaviors. Additionally, the C-suite should establish a marketing measurement framework that is comprehensible to everyone, emphasizing outcomes rather than solely focusing on marketing activities.
This recommendation comes amidst a decline in average tenure for Fortune 500 CMOs, dropping to 4.2 years in 2022 from 4.5 years the previous year, according to a recent study conducted by Spencer Stuart. The average tenure for the top 100 advertisers was 3.3 years. Meanwhile, leading marketers such as General Mills, Disney, and Mars Petcare have recently appointed chief brand officers.
