As a former chief marketing officer, I remember when the CMO job was thought to be a lot simpler. Essentially, the chief marketer was expected to create an ad, get it to the consumer through one of the few available media and then sit back and wait for the impact on sales. CEO direction to the CMO could be summed up metaphorically in about five words: “Shut up and advertise this.”
Those days are good and gone. The way the world speaks and hears has changed radically, and the tools we use to communicate and collect facts are changing dramatically. Even as access to consumers grows, so does consumer power. They can choose from hordes of entertainment venues, use technological tools to filter out unwanted messages and shoot down any surviving messages with a heightened sense of cynicism. Brand loyalty is tougher to achieve. Conventional advertising just won’t cut it-and neither will traditional marketing executives.
That could be trouble for some CEOs, who are increasingly dependent on the competency of their teams as complexity in business grows. And unlike myself, most CEOs tend to climb the ranks through operations or finance, not marketing, which means they really have to trust their CMOs to be the custodians of the brand-perhaps the most valuable company asset.
If the brand is mismanaged, it won’t be the head of marketing who faces the analysts. When McDonald’s debut of the Arch Deluxe-designed as a higher-priced, adult-oriented burger-completely flopped, it communicated to many observers that the company was out of touch with the needs of its customer base. And it was longtime CEO Michael Quinlan who was left to defend to analysts his enthusiastic support of the failed campaign.
Going forward, marketing and branding mistakes are only going to get more costly, as expenditures in that area rise. Both Gartner and Accenture predict corporate spending on marketing for the global 1,000-which account for 80 percent of spending-will reach $1 trillion by 2003. The amount of shareholder value that can be squandered by mismanaging that is pretty significant.
My rough guess is that 70 percent of CMOs in office right now need a radical makeover to keep step. Some may have sought deeper involvement in strategy, but were ill-equipped to add much value to strategic planning, and they may be able to be retooled. Others, mired in old thinking, will not be able to make the transition, and they’ll simply need to be replaced.
Today’s marketing chief has to be a strategic leader who can identify the economic implications of rapidly changing markets and guide the company accordingly. The best CMO is a shrewd analyst who can hold his or her own with real data and do financial modeling alongside other key executives. Frankly, there isn’t much trust of the CMO for things outside of communications, which is one of the reasons many customer relationship management projects have failed. While the intent of CRM was to service the marketing function and increase revenue, the project leadership was often given to IT departments that focus on cost reduction, because the marketing officer could not be trusted with such heavy lifting in the technology and financial analysis arena. The ROI must be tied back to revenue generation to be effective. And historically CMOs have not been known for their financial acumen.
One of the best ways to find out if your CMO is up to the tasks of the 21st century is to give him or her more responsibility. Don’t just send that person to marketing strategy seminars; think about having him or her run a startup division with heavy IT concentration. If I were ever to return to the CMO position, my experience as the CEO of a startup company worrying about cash flow in the technology space would make me a fundamentally better chief marketing officer than I ever was before, because I’ve stretched and seen the other side. As a CMO, I was constantly trying to impress upon my CEOs the power of the brand. I knew life had changed when as a CEO, I said to my head of marketing, “Okay, I appreciate the power of the brand, but right now it’s about sales.” s
Keith Ferrazzi is president and CEO of Los Angeles-based YaYa, which builds interactive games-Advergames-for marketing purposes. He was previously CMO of both Starwood Hotels and Deloitte Consulting.