At CES 2019, there is quite a hubbub about an impending chief marketing officer (CMO) crisis, one which Mastercard CMO Raja Ramannar, on a panel at the event in Las Vegas, appropriately dubbed as existential. The venue, a week-long tech bacchanalia, may suggest that the impending doom is brought about by vast technological shifts and its accouterments – data, digital channel, AI, blockchain, neural networks, to name a few. The problem, however, runs much deeper. CMOs have stopped being marketers.
As an analyst in the marketing space, advising CMOs and their marketing teams, I get to peek into the inner workings of many marketing organizations serving diverse audiences, both B2C and B2B, ranging from grocery shoppers to gastroenterologists. And, what I see has me worried. Peruse a garden-variety business school textbook on marketing strategy (I use a classic Kotler and Keller when I teach MBA classes), and you’ll find that three-quarters of what is covered in the book is outside the purview of most CMOs. To illustrate, let’s resurrect a simplified but worthwhile classic of marketing, the 4 Ps:
Product: Product and service organization have dedicated functions, working tightly with technology and operations, with limited marketing involvement. If marketing owns the insights organization (which it often does not), it may exert some influence on the direction of product and portfolio management and innovation. I have managed product marketing organizations that bypassed the CMO and reported to the COO.
Price: Seldom does the CMO have anything to do with price-setting. Yet this is of extremely high strategic and financial value to the organization, as benefits from price increase drop directly to the bottom line (unlike those from volume increases). The complexities of pricing, such as modeling demand elasticities, is regarded in many organizations to be outside the capabilities of the traditional marketer.
Place: Marketing figures in traditional retail strategy, especially in trade promotion and display activity. But as digital-first, direct-to-consumer brands subvert traditional retail and disrupt channel structures, marketing is too siloed in legacy companies to respond adequately. In categories where intermediary channels influence and drive volume (like brokers), marketing typically cedes ground to dedicated, usually sales-related, functions.
Promotion: This is the one-fourth that where marketing has entrenched itself. There is overlap with ‘place’ in some categories where marketers engage in trade promotion and channel communications. The lion’s share of work is about brand communication and awareness, working with a myriad of agencies to manage media and creative, to influence early funnel activities. And of course, there’s Cannes in the summer.
The soon-to-be-extinct CMO is the one that does not embrace the full spectrum of marketing activities. To fixate on one slice of marketing that is focused on communication is to turn away from the other three slices that feed the profit engine. Ramannar, in his comments at CES, goes on to lament that CMOs are especially susceptible in the eyes of the CEO, as they fail to connect the dots between brand and value. It comes as no surprise that the CMO’s tenure is the shortest in the C-Suite, and that many organizations, like the marketing powerhouse Coca-Cola, have eliminated the CMO position.
Data won’t kill the CMO. Marketing will. But data will make it quick. With technology shifts and a concomitant data explosion, the sophistication required to work the traditional marketing levers such as product and price management has increased significantly. Even in the more familiar territory of communication and promotion, the discipline has advanced considerably. For example, with hyper-personalization and neuroscience-driven analysis, the old-world marketing of fuzzy personas and feel-good creative has been rendered obsolete. The inability to effectively extract value from data puts a CMO on the path to extinction.
The CMO mandate, then, is to reach back and look forward. Back to the basics, to marketing that is not boxed into communications and creative, but to marketing that is strategic, analytical, business-focused and value-driven. And then reaching to the future, where brand, culture, and technology intersect, with the ability to harness data and analytics in service of the customer and the brand.
Dipanjan Chatterjee is the vice president and principal analyst of Forrester Research