At the close of each calendar year, we editors like to ask industry leaders what they learned that year and what they’ll take away into the next. One word has dominated our conversations reflecting on 2023: resilience.
A fitting 2023 word, that. Marketing organizations and creative agencies have had to be especially resilient as they navigate macroeconomic troubles, inflation, geopolitical crises, shrunken ad budgets and technological disruptions like generative AI.
But another, more surprising word has featured prominently in conversations about the year ahead: growth-minded. Despite all the challenges wrought by 2023, leading chief marketing officers did not focus on merely surviving the year that was; they marshalled their creativity and industriousness to help their brands grow without spending as much as they did a year earlier. And this created an opportunity for them to gain more prominence in the eyes of their chief executive officer and board.
So, if 2023 was a year of resilience, 2024 may well test whether and how the relationship between the CMO and CEO can drive outsized growth for their organizations.
Recent research bears this out. In one study published in October, McKinsey found that the relationship between CEOs and CMOs, particularly how they jointly defined marketing’s role and remit to shape growth strategy, is highly correlated to their companies’ performance. In particular, CEOs who situate marketing squarely at the core of their growth strategy are twice as likely to have greater than 5% annual growth compared with their peers, according to the study, which was conducted with input from the Growth Council and board of the Association of National Advertisers (ANA).
Along those lines, according to a study conducted by Adweek and B2B market research company NewtonX, high performance in the CMO role correlates with a CEO’s support for marketing. Forty-two percent of outperforming CMOs we identified said their CEO “perfectly understands” the value of “brand,” compared with 32% of merely good or average CMOs, according to the study.
Yet despite these impressive benefits, a divide between the CEO and CMO persists. Last year, full-service independent ad agency Boathouse Group commissioned a survey asking CEOs to grade their CMOs on a variety of topics. Most respondents gave their top marketer a B on overall performance. More CEOs handed out Cs than As. Questions about a CMO’s ability to drive growth and translate company objectives into marketing goals also received mixed reviews.
A more recent study by Forrester found that 97% of CEOs think their companies meet customers’ needs, yet only 75% of CMOs agree. McKinsey, too, found a similar perception gap: While nine out of 10 CEOs said the role marketing plays is clearly defined in their companies, only 22% of marketing chiefs said their jobs are well-defined and understood by other C-suite executives, down from 31% in 2019.
All is not lost, despite the disturbing trendlines. A redefined and reinvigorated relationship between the CEO and CMO is not only possible but necessary for the next phase of business growth. As our industry looks ahead to 2024, here are three areas that marketing leaders can address when navigating a new relationship with their CEO.
Unclear remit
When the CEO and CMO speak the same language and understand one another and the task at hand, they’re better equipped to succeed together.
According to the McKinsey study, more than two-thirds of the CMOs the firm surveyed said there are two or more leaders in their companies who oversee marketing and marketing-related activities and sit on the executive committee reporting directly to the CEO. The result is a blurring of marketing’s role and an overlap with other customer-related remits.
That’s why it’s more critical than ever for marketing leaders to double down on what’s made them such a positive force for their organizations in the first place. CMOs must continue to exploit real-time data and insight into advertising and media spending and keep driving measurable business growth. They must make sure they have the right math and language to explain results driven by direct and indirect spending. And they must continue to inspire their organizations to bring new ideas to life.
Unclear influence
CEOs and CMOs aren’t always fully aligned when it comes to the true impact and influence of marketing. One reason for this is because modern marketing has rapidly evolved into a multidimensional, technical discipline and become increasingly complex—hence, not easily understood by non-practitioners.
When McKinsey asked about familiarity with marketing tactics such as paid social, personalization and advanced targeted strategies, only about 50% of CEO respondents said they feel comfortable with modern marketing. Meanwhile, 66% of the CMOs surveyed by McKinsey said their CEOs were not comfortable with modern marketing.
Against this backdrop, it’s incumbent upon the CMO to filter everything they see and hear through a simple goal—customer growth—and transmit what they learn back to the entire organization in a new, consistent, accessible language. In this way, CMOs must become the cross-functional knowledge integrators of their organizations, which will only endear them to their CEO.
Laura Jones, CMO of Instacart, said one of the most important aspects of marketing is to “translate creative ideas into commercial outcomes.”
“As marketing becomes an increasingly technical discipline, the ability to collaborate across all different functions becomes very important,” Jones said.
Unclear metrics
When CEOs and CMOs aren’t focused on the same metrics, they are working at cross purposes. When McKinsey asked CEOs and CMOs of the same companies what their top three marketing metrics were, they only agreed half the time. On average, the CEOs responding to the McKinsey survey felt that marketing metrics clearly tied to business impact less than 60% of the time.
To bridge the divide between the CMO and CEO, marketers must work to develop metrics that connect marketing efforts with the financial results the company is actually generating.
At IBM, when discussing strategy, the leadership team rallies around a clearly defined set of shared outcomes while not letting the confines of organizational structures hinder them, said Jonathan Adashek, IBM’s senior vice president of marketing and communications and chief communications officer.
When Arvind Krishna became IBM’s CEO in 2020, he set out to be the leading hybrid cloud and AI platform company in the world. “Having this clear objective to drive towards gives us the freedom to explore new pathways for collaboration,” Adashek said.
Resiliency pays off
Research shows what current and former CMOs have always known: The chief marketing officer has one of the most demanding and potentially influential jobs in the C-suite. Today’s CMOs are expected to be brand builders and customer experience creators as well as cross-functional diplomats, overseers of technology transformations and crisis managers.
Interestingly, despite a CEO-CMO divide, many marketing leaders are rising through the ranks to become chief executives themselves. Spencer Stuart, the executive search and leadership consulting firm, found this year that CMOs and senior executives with marketing experience are not only viable candidates for CEO roles but in many cases outperform their CEO peers who come from other disciplines. Search firm Heidrick & Struggles has reported that the most common functional background for Fortune 500 CEOs is finance (31%), followed by engineering (18%) and then, tying for third, sales and marketing, and operations (15% each).
All the above makes for great CMO-CEO partnerships in 2024. How will you fare? We’ll find out next year. Until then, wishing you happiness and growth in 2024 and appreciation for all you’ve learned in 2023.
