Why CMO Role Is Not as Important as You Think

Study of Fortune 1,000 Finds Post's Authority Is Limited at Most Companies

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NEW YORK (AdAge.com) -- As if average 28-month tenures weren't enough of a disincentive for marketers to seek the chief marketing officer hot-seat, a recent assessment of SEC filings of Fortune 1,000 companies suggests that the post remains low on the priority list at many organizations, and CMOs' authority remains limited.

A study conducted by Ernst & Young and presented as part of a panel with chief financial officers at the ANA Marketing Accountability and Effectiveness Conference found that 13% to 15% of Fortune 1,000 companies employ some sort of marketing position with a chief or senior-executive-level title, such as chief marketing officer or chief revenue officer. And only 70, or 7%, of those firms list the head marketer -- carrying any title, not just CMO -- in financial filings. Being listed in those public filings means an individual is among the highest compensated executives at the company and sits on the operating board, which is charged with fiduciary and operating responsibility for the company.

The absence of a head marketer in public filings is evidence of their potential lack of say within organizations, said Ed See, a consultant in Ernst & Young's advisory services practice and former president of Marketing Management Analytics. "It means the CMO is not as involved as they could be," Mr. See said. "Within a corporation, you are either part of the core decision-making process or you're submitting your budget to be approved. If you're not listed as one of the top executives, chances are you're submitting your budget."

The study also found that in some cases, other chief executives, such as the chief information officer and chief sales officer, were named in public filings while the head marketer was excluded.

The type of company publicly listing a head marketer as a top executive varied wildly, said Matt Brewer, also a consultant with Ernst & Young. Classic consumer-products companies such as Procter & Gamble, Coca-Cola and Del Monte Foods list the title, but consumer-finance companies such as American Express, restaurants such as Burger King and retailers including Target and Sears Holdings also indicate marketers are among the top-compensated executives.

Financial skills becoming necessary
Of the 70 marketers that are publicly listed as top executives, about half have a background in marketing, communications or advertising, while the other half have a background that includes product development, brand management or other operational roles -- a sign that financial acumen is, indeed, becoming a necessity for CMOs seeking influence within organizations.

"Historically, CMOs come out of the agency world, and they're brilliant at outbound messaging, stunningly good at handling great TV," said Mr. See. "Frequently you got there by leading a great commercial and doing breakthrough work. What's being asked of CMOs today is to add a set of financial skills that are skills that have not traditionally been there."

The recession is hastening that shift. As companies slash marketing budgets and monitor every dollar going out the door, marketers are being asked to make an even stronger case for advertising and its returns. In this type of environment, Mr. See said, the four Ps of marketing are being balanced against the three Ps of finance and operation: payroll, production and profit. After all, the biggest challenge most head marketers face is that they are viewed as an expense.

"We need to start looking at the spending as an investment, not just an expense," said Mr. Brewer. "[CMOs] need to be able to communicate that to their partners in operations, in terms of metrics that everyone can understand, not just metrics that marketers understand."

Messrs. See and Brewer liken the evolution of CMOs to that of chief information officers over the last decade. In the late 1990s through the early 2000s, most CIOs had little financial or operational expertise. Like CMOs today, they too were making major, multimillion-dollar investments in a variety of projects and promising certain outcomes. When those outcomes didn't materialize or the projects failed outright, the role began to shift, as companies began to insist that the CIO role be held by someone financially and operationally competent. Today, CIOs, in most cases, are more well-rounded managers and are among their firms' most highly compensated executives.

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