Embattled CMOs share strategies

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With pressure bearing down on them from top management, senior marketing executives met at the CMO Summit last month to debate how to improve the role and performance of marketing within their organizations.

The CMO Summit 2005, produced by the Chief Marketing Officer Council, attracted more than 250 senior marketing executives from companies such as Dell Inc., IBM Corp., Microsoft Corp., Oracle Corp., Nortel Networks and Visa USA. Now in its fourth year, the summit, a two-day affair in Monterey, Calif., focused on "technology-enabled on-demand marketing," or the use of real-time business intelligence, marketing performance analytics and predictive models to help marketers manage, allocate and use strategic assets and resources.

"Marketers need to be more adept and adroit in deploying their organizations to go to market faster, gather intelligence and become far more analytical and disciplined in sourcing data," said Donovan Neale-May, executive director of the CMO Council.

Lack of influence

According to a new study by the CMO Council and marketing services company MarketBridge, only 6.7% of marketing executives at companies with $501 million or more in revenue said their marketing organizations were "highly influential and strategic" within their companies. At companies with $500 million or less in revenue, only 12.9% of marketing executives said their marketing organizations were highly influential and strategic.

Also, at companies with $501 million or more in revenue, only 40% of executives said their marketing organizations were "well-regarded and respected"; and for companies with $500 million or less in revenue, only 48% said their organizations were well-regarded and respected.

"Companies need to really restructure their marketing organizations in order to meet the new skills, requirements and demands that are being placed on marketers," said Jan Soderstrom, chairman of the CMO Council, who presented top-line results from the survey at the summit.

The study, called "Renovate to Innovate: Building Performance-Driven Marketing Organizations," was based on a survey of about 400 senior level marketing executives.

It found that about two-thirds of CEOs said their marketing groups are "mission critical" for creating top-line company growth.

However, more than 40% of marketers said their organization's alignment with the company's mission is "just average" to "not well-aligned."

Marketers said the three top areas of weakness are customer insight and access (46%), strategic depth and business knowledge (39%) and marketing analytics and measurement (35%). Respondents could select more than one answer.

The study found that 73% of marketers said they have no formal marketing performance scorecard to effectively rate their organization.

ROI successes

"You really need to create value with every marketing initiative," said Todd Forsythe, VP-marketing at Oracle Corp., who spoke at the summit.

In his presentation, Forsythe discussed how Oracle has transformed its marketing organization over the past five years to more strategically align marketing with other disciplines and quantify marketing ROI.

About five years ago, Oracle reorganized its global marketing organization, collapsing the various departments into one group with a single budget.

"If you want to maximize marketing ROI, you need to be very fluid in moving dollars around the mix," Forsythe said.

He said that in most traditional marketing companies, demand generation, events and other marketing activities are run by separate organizations.

"We collapsed them all into one budget to create more integrated marketing teams," he said.

In addition, Oracle has developed a sophisticated measurement model that analyzes marketing at the macro and micro levels.

At the macro level, the software company looks at the aggregate marketing investment and calculates variables such as average conversion rate and average deal size, Forsythe said.

It then uses an optimization model, plugging in parameters such as campaign objective, product, message and medium. "Then we do simulated ROI scenarios based on statistical correlations," Forsythe said. "It gives us the optimal mix to optimize our pipleline."

At the micro level, Oracle looks at any single marketing activity-such as an event, a banner ad or a Webcast-to determine the extent to which it generated a lead, he said.

"The key to make this all happen is having a single view of the customer, so that all applications across sales and marketing are linked," Forsythe said. The company uses its own database and CRM software to measure its various marketing activities.

"shocking" counter trends

"The key insight for us is that with our actual data and ROI performance, we're seeing shocking trends that are counter to many emerging media trends," Forsythe said.

Oracle's budget for "traditional" online marketing-banner advertising, text links and newsletters-was 18% of its total demand-generation budget, he said.

Now, it's just a few percentage points, Forsythe said, adding, "We're investing more in developing Webcasts and content with publishers, and events, to provide a more engaging customer experience."

He said this shift has had a dramatic impact on ROI. "Cost-per-response is 83% lower, conversion-to-lead is 35% higher and overall ROI is substantial," he said. "We see counter trends with regard to other media trends as well. Our print advertising budget is up 26%. It's not because we love print, but rather the ROI pulls us in that direction."

Conference attendee Martyn Etherington, VP-marketing at Portland, Ore.-based Tektronix, said he came to the event to network and learn. "The underlying message, in speaking to my peers, is about making marketing more relevant," he said.

Etherington said he was particularly impressed with presentations by marketers that had transformed their brands, including Carl Pascarella, former president-CEO of Visa USA, and Clent Richardson, CMO at Nortel Networks.

Pascarella discussed how Visa evolved from a credit card company to a diversified financial services company, while Richardson talked about his challenges in rebuilding the Nortel brand after the company faced financial and brand difficulties.

"They talked about the mistakes they made with refreshing honesty," Etherington said.

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