The Short Life of the Chief Marketing Officer
Stroll through the C-suite at many companies, and it's an easy bet which executive is a dead man (or woman) walking: the chief marketing officer. CMOs last 26 months on average these days, says recruiter Spencer Stuart, vs. 44 months for CEOs. In the past few weeks, CMOs at Chico's (CHS), Home Depot (HD), MySpace (NWS), and Rite Aid (RAD) all have left their posts after short tenures.
The CMO job is a lot more complicated and arduous than it was just a few years ago. And that, say recruiters and CMOs, helps explain the high turnover. At a time when marketers are faced with a bewildering array of New Media options and consumers are better informed than ever, Wall Street-obsessed CEOs are increasingly impatient for a payoff. "CMOs are expected to deliver instant results," says Mark Jarvis, Dell's (DELL) CMO since October. "It makes for a deadly cocktail of high expectations, resistance, and complexity."
CMOs have always struggled to justify their existence. "You might be surprised how few people have strong opinions about what the chief financial officer or chief information officer is doing," says John Costello, CEO of hearing-aid maker Zounds, who has been CMO at Home Depot, Sears (SHLD), and Yahoo. (YHOO) "But CMOs have almost everyone second-guessing [them] and looking over their shoulder."
Chief executives understand that the CMO's role needs to change to suit new circumstances, but few have figured out how to do so. "Probably 70% of the companies I work with don't know what they're looking for when they recruit a CMO," says Patrick A. Delhougne, who headhunts marketers for executive recruiter Korn/Ferry International (KFY). Jeff Jones, who was the chief marketer at Gap (GPS) for two years before leaving to run ad agency McKinney (HAVSF), says he discussed 22 CMO positions over five months. Not one, he says, spelled out coherently what he would be accountable for.
It's not hard to see why companies are grappling with this. As recently as five years ago, the CMO's role was much simpler. Chief marketers devised a brand message, hired an advertising agency to create clever ads, managed promotions, and then waited for their bonus or pink slip. "You would run a major ad campaign and trust it," says Jim Speros, a veteran marketing executive who is currently CMO at Marsh & McClennan (MMC). But that won't fly in a world where blogs, social networks, and cell phones are fast changing not just where ads go but how people shop.
It doesn't help that chief executives and chief marketers often have very different imperatives. Building or even maintaining a brand is a long-term process that requires patience and incremental change. But CEOs operate at a time when investors fixate on quarterly or monthly results as never before.
Anne MacDonald, who became CMO at Macy's (M) in February, 2006, wanted to move the brand upmarket. Doing so would take time and meant the retailer had to quit its habit of using discounts and promotions to hit monthly sales targets. It seemed like a great idea--till sales started slipping. Without those regular jolts to the top line, analysts began downgrading the stock. After 15 months, MacDonald left Macy's. (She and the company declined to comment on her departure.)
Corporate bean counters, who have long deemed marketing a squishy discipline, increasingly are demanding data to prove that a CMO's strategy is valid. One of the first things Cammie Dunaway did upon taking the CMO job at Yahoo! in 2003 was to hire a consultant to track return-on-investment for her marketing department. But Dunaway, who left to take the top sales and marketing job at Nintendo last October, says: "Your peers are always suspicious you have ordered up your own proof of accountability." Her next move was to enlist Yahoo's own CFO to handle the analysis. "When you have the CFO's staff making marketing's case, instead of trying to make your case to the CFO," she says, "the credibility spreads fast."
Few chief marketers understand the importance of being accountable more than James Farley. When he left Toyota Motor (TM) recently and joined Ford (F) as global CMO, Farley knew he'd probably fail if his job had no hard connection to monthly sales--every automaker's report card. He also understood that Ford's regional operating chiefs might fight global marketing strategies from a CMO with no skin in the game. So Farley asked CEO Alan Mulally to give him responsibility for sales in the company's most difficult market, the U.S. That way, he'd be in same pressure cooker as his peers. Now, when Farley tries to globalize the Ford brand strategy, he'll have more credibility. "Being accountable for sales in the U.S.," says Mulally, "will make the team tighter."
Even as the bean counters scrutinize their every move, CMOs are under enormous pressure to navigate a strange new world. Consider three typical workdays for Ted Ward, marketing chief at Geico insurance. Over 72 hours, he reviewed how many people had visited Geico's Web site the previous week, how many were clicking on ads and then buying insurance, and how much he was spending on Web marketing. He met with his ad agency to fine-tune three separate campaigns. He strategized about the evolution of Geico's Caveman Web site, the most effective ways to use social networking sites such as Facebook, and how deeply to venture into Web TV. It's hard to choose marketing options, says Ward, "when the sands keep shifting."
That's why CMOs spend much of their time educating themselves. Marc Lefar, who was chief marketing officer at Cingular (now AT&T (T)) until leaving for personal reasons in April, knew he needed to get his head around a geeky marketing tool called search engine optimization (SEO). Now more important than Nielsen ratings, SEO is used to make sure a company's site shows up as high as possible on search results. Getting this right can mean the difference between capturing a potential cell phone customer or losing him to a rival.
So Lefar sat down with wonks from ad agency Digitas for an intensive course on the mysteries of SEO. "The average 45-year-old chief marketing officer cannot possibly figure out what's cool and what's going to drive the business," Lefar says. "You've really got to have an investment in your own education [to] keep yourself exposed to things out of your comfort zone."
Lefar might have added that CMOs also must expose their colleagues to newfangled marketing techniques, and then get them to pitch in. Speros recently overhauled his company's Web site, adding studies and research papers that showcased Marsh & McClennan's varied expertise and, he hoped, would attract new customers.
To make the new site credible, Speros needed to get all the company's divisions, from human resources consultant Mercer to security and risk shop Kroll, to help design them. Then he had to make sure that every employee who interacts with customers at panel discusions was adequately versed in the site's contents. Speros had three months to get the job done and needed to coordinate teams around the globe. This new emphasis on intracompany diplomacy, he says, helps explain the 75-hour weeks and the 300 e-mails and 70 voice mails he receives each day. "It's substantially more difficult [than in the past]," Speros says. "There's a whole sell-in that you have to do across different departments. And that takes time." Which is precisely what many CMOs don't have.