CMOs feel the heat from the C-suite

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Senior marketers at Red Herring's CMO 2007 conference said they are gaining influence at the executive table but still face significant challenges, including growing revenue, measuring success and figuring out the best use of new marketing tools such as social media.

The conference, held last week in Carlsbad, Calif., attracted more than 100 senior marketers, who discussed their changing roles and how they're addressing key challenges.

According to a survey of senior marketers by Red Herring, the No. 1 challenge for CMOs this year is growing revenue, followed by aligning marketing to the company's strategic direction and positioning/branding issues. The questions were open-ended, so the exact responses varied.

When asked, "How much pressure do you feel from your CEO and other C-level officers to prove the value of your work in the marketing function and your value to the company," more than 40% of respondents said they felt "high" pressure, the survey found.

"The CMO is becoming more of a business partner to the CEO and COO," said Kathryn Hanson, CMO of Red Herring.

Marketers at the conference agreed that they are working in close partnership with their CEOs to help drive revenue and align marketing to the company's strategic direction.

"The work of the CMO has to align to the CEO's objectives," said Lauren Flaherty, who joined Nortel Networks as CMO in May af- ter being recruited by President-CEO Mike Zafirovski.

"He knew what had to be done in terms of a turnaround," Flaherty said, pointing to troubles the company had faced including officers being fired for accounting fraud and high-level turnover.

Flaherty, who spent 26 years at IBM Corp. before being hired by Nortel, said one of the most important skills of a CMO is living by fact-based decisions.

"You have to measure whatever you can and benchmark," she said. "I have completely reoriented the marketing approach to be more predictive."

Nortel now uses market tests and real-time analytics to measure everything from customer satisfaction to global communications capabilities. Flaherty said that after she'd been in her job for about four months, people at the company started asking why Nortel wasn't rolling out a new ad campaign.

"You can't advertise your way out of this one—you have to show sustained positive results," she said.

Nortel will be launching its first branding initiative on Flaherty's watch in about six weeks, created by the company's new advertising agency, McCann Worldgroup, San Francisco. Under her direction, Nortel consolidated its global advertising account with one agency after previously working with several shops.

Be 'indispensable'

Flaherty said another key CMO skill is being "indispensable" to sales. For example, when Nortel debuts its ad campaign, it will first unveil it to the sales organization. "They are an incredibly important group" said Flaherty, who conducted focus groups and a tools assessment with Nortel's global sales team to find out what they needed to better do their jobs. The result was the creation of a single sales portal to replace nine different ones.

Flaherty also conducted a skills assessment of the entire marketing department and replaced virtually all her direct reports. "When you're going through a recovery, time is not your friend. You have to make decisions quickly," she said.

In looking at the future, Flaherty said hyperconnectivity, mobile opportunities and true broadband are key areas to watch.

"These are incredibly exciting opportunities to us as marketers, particularly if you want to move a company like Nortel from one that is part of a troubled past to one that is part of a vibrant future," she said.

During a roundtable discussion titled "DNA of the New CMO," senior marketing executives talked about their changing role.

"The biggest fundamental change is that heads of marketing must now become full business people if they want to have a place at the executive table," said John Gunn, VP-global marketing at Aladdin Knowledge Systems, a software security company.

Increase financial focus

Gunn said most CEOs come from a financial background, so CMOs need to increase their focus on the financial side of the business.

"We need to talk about how we do ROI more efficiently," he said. "The role of the CMO has to become more of a business adviser and embrace the same world our CEOs do," Gunn said.

Hunter Hastings, managing partner of EMM Group, which makes enterprise marketing management systems, said CMOs should be more focused on building out marketing capabilities—such as processes, metrics and collaboration across the enterprise—than on actually doing marketing.

"Creativity is the worst thing to have in a CMO," said Hastings, which got a rise out of the audience.

Tom Seclow, quality officer at executive search firm Spencer Stuart, said one of the most important skills CMOs can have today is the ability to collaborate across the enterprise.

"Companies have become much more `matrixed,' " Seclow said. "As a result, strong CMOs have to be very good at building bridges across the organization, communicate well and understand the functions of other people in the organization."

Be willing to experiment

Another challenge for CMOs is understanding how to use emerging marketing tools such as social media and being willing to experiment with them.

"There is less command and control from the CMO standpoint. You have to be comfortable with lots of experiments going on," said Mark Breier, CMO at Plantronics, a headset manufacturer.

"One of the big trends is the emphasis on viral. You have to identify the product or service value proposition, then test all propositions to see if there is a viral application, whether that's a blog or viral ad."

For example, Plantronics is getting ready to launch a viral Web site that features office humor.

"There are different spots we feel uncomfortable with, but we are going to see what resonates with the audience and see what gets passed along," Breier said.

Larry Weber, chairman-CEO of marketing services company W2 Group, said, "Social media will be the most important change in marketing. You can't buy your way in—you have to communicate your way in with content."

He said that as the Web becomes more visual, marketers will have to generate compelling video content, whether that's from marketing professionals or from users.

Blogs and podcasts will also continue to grow, and smart marketers will recruit members from their online communities to generate content for these vehicles, Weber added.

"Leveraging social media will become the core of brand building, lead generation, research, product launches and customer retention," he said.

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