How CMOs Should Function in a Recession
Some good news for marketing heads: Chief Marketing Officers (CMOs) are holding on to their jobs longer. Spencer Stuart's annual survey of CMO tenure at the 100 most advertised brands in the USA reveals average time on the job has risen to 28.4 months from 26.8 months in 2007 and 23.2 months in 2006.
The popular interpretation of this data is that CMOs are aligning better with CEOs. The latter are no longer expecting instant rainmaking and the former have learnt to be humble. CMOs have learned not to pontificate about brand values before researching the issue, and they no longer fire the incumbent advertising agency the day after being appointed. The best CMOs stay low-key and aim to make the CEO, who is often from a non-marketing background, comfortable becoming the chief cheerleader for the brand.
The economic recession has, perhaps surprisingly, elevated the standing of the CMO. It hasn't always been this way, to be sure. So how can CMO's solidify this standing with the chief? Here are the four top marketing issues on which today's CEOs are looking to their CMOs for guidance:
Shifting consumer behavior. The recession has induced dramatic changes in consumer attitudes and behaviors in many categories. Companies need updated consumer research and revised approaches to customer segmentation. The CEO needs a CMO who understands the company's brands and consumers (and their comparative profitability) to recommend needed changes in customer targeting and brand messaging.
Price positioning. An economic downturn invariably increases customer price sensitivity. Marketers need to hit key retail price points, emphasize lower cost stripped-down or downsized versions of their products, and revamp their promotion calendars to maximize price competitiveness at the point-of-sale. While price and perceived value inevitably become more important to consumers, the core benefits of the brand must still be emphasized. On these matters, collaboration between the CMO and the CFO is critical.
Stretching marketing dollars. Recession demands that marketers come up with creative ways of doing more with less. Dollars might be shifted from television to cheaper radio advertising if it's important to maintain message frequency. Different versions of the same ad might be used in different countries rather than separate commercials being produced for each. An experienced CMO will know how to take a scalpel rather than a sledgehammer to the marketing budget.
Embracing digital. Rather than avoiding Internet advertising, now may be the time for many companies to experiment further and advocate more of their budgets to search advertising, banner advertising, or motivating user-generated content through a branded website. Only the CMO has the expertise in the C-suite to recommend how to proceed.
The best CMOs have both left brain and right brain proficiency. They must have both the analytical ability needed to focus on return for their spend, but also the creativity needed to position their brands in ways that are truly distinctive. In a recession, both skill sets are still needed but the first outweighs the second in importance.
The recession will have two important, lasting results for CMOs:
First, financial accountability of marketing is here to stay. Only in a few high-margin fashion-intensive categories will the shoot-from-the-hip right brain marketer survive.
Second, improved accountability requires CMOs to be financially literate, to understand the balance sheet as well as the income statement impacts of marketing initiatives. The result will be a new generation of CMOs who command more respect in the C-suite and hold their jobs longer as a result.
For more views on the role of the chief marketing officer, see John A. Quelch and Gail J. McGovern, "The Fall And Rise Of The CMO", Strategy + Business 37 (Winter 2004), pp. 44-51. An adapted version of this post appeared in Advertising Age, March 10, 2009, under the title "Why CMOs Are Gaining Ground In The Recesion."