Do CEOS Understand Modern Marketing?
Kaitlyn Kim
Stillman News Writer
As the marketing world continues to evolve and expand, one must ask the question: do the CEOs even understand modern marketing? It is not uncommon to see an advertisement that is a total miss, whether it is a misplaced social agenda or a too-corny script, researchers have found that CEOs DON’T understand modern marketing. Why?
The McKinsey research shows that CEOs, chief executive officers, despite prioritizing marketing, can vastly improve their bottom lines. Business-to-consumer (B2C) companies that successfully market can expect to be three times more likely to achieve greater than 5% revenue growth. Likewise, business-to-business (B2B) companies are more than twice as likely to achieve greater than 5% revenue growth.
The McKinsey survey previously mentioned was based on conversations with more than 100 people in “C-level” (chief, high-ranking authorities, or officers within their area of expertise) growth roles, as well as 21 CEOs from B2C and B2B companies from varying sizes and industries. The overall result had confirmed the very real disconnect between CEOs and marketers.
Typically, CMOs, the corporate executive responsible for an organization’s marketing activities, are responsible for the “4Ps”, which refers to product, price, place, and promotion. However, these aspects of business are also increasingly managed by other executive roles, examples being chief growth and chief brand officers.
Reportedly, 32.7% of companies have one position, 30.7% of companies have two positions, and 36.6% have three or more positions that focus on growth and customers. This data was reported through the CMOs surveyed by McKinsey.
Another realization was the gap in understanding regarding marketing’s remit (the act of sending money to a person or place especially in payment of a demand, account, or draft). This gap of understanding is evident between the chief executives and chief marketers, which is proven through 9 out of 10 surveyed CEOs. Those CEOs showed signs of believing that the role of marketing was well-defined, while only half of the CEO-CMO pairings gave the same response on the topic.
On top of that, 30% had agreed that marketing sets the metaphorical “North Star” for a brand and its reputation, whilst 15% believe that marketing uses digital tactics that drive business to receiving results, and 5% understood marketing as delivering a “world-class” customer service.
McKinsey’s estimates seem to suggest that this disconnect can be attributed with the unfamiliarity of modern marketing in regards to its older and simpler forms, since only 10% of Fortune 250 CEOs have reported marketing experience. Most CEOs have shown signs of being unfamiliar with the digital, data-driven field that is marketing. This is clearly reflected in the number of martech (marketing technology) solutions that have doubled each year over the past five years, according to McKinsey. A vast contrast also occurred in the interviewing process itself, where about half of the surveyed CEOs claimed to feel comfortable with modern marketing, while two-thirds of the CMOs reported that their CEOs were indeed uncomfortable with modern marketing.
The gap between CEO and CMO understanding regarding metrics are equally as concerning, especially since it is essential towards the work of modern marketers. Out of all the CEO-CMO pairings, only half of them had agreed on their individual company’s top three marketing metrics. The common pattern has depicted CEOs as being focused on revenue growth and margin improvements while the CMOs are focused more on brand awareness and recognition.
McKinsey has offered several solutions in order to reconnect the division between CMOs and CEOs.
Firstly, it is recommended that the CEOs and CMOs take effort to clarify the marketer’s role, and should appoint a C-suit level role that can effectively bring together the focus needed on customer-centric growth across any executive leadership. CEOs must also take time to better understand the importance of CMOs. CMOs can contribute to growth and allocate more time that is needed to learn about marketing innovation and the changing consumer behavior. Furthermore, the C-suite that is involved in a company must be able to outline a marketing measurement framework that is understandable for every higher corporate member so that they can be more focused on outcomes rather than just marketing activities.
Since the report, Fortune 500 CMOs have continued to see their average tenures decrease. It is now down to 4.2 years in 2022 from the 4.5 years they had had the year prior according to a recent study by Spencer Stuart. Meanwhile, companies thriving with their marketing such as Disney, have appointed chief brand officers in recent years.
Although the future for marketing may seem dim due to the lack of understanding coming from the CEOs, there are clear solutions that can future drive a company to the ideals that they aspire for. Taking notes of the modern marketing world not only benefits those who are directly involved, but those who plan to reach high rankings within the marketing field.
Contact Kaitlyn at kimkaitl@shu.edu