CMOs 'must educate CEOs on true value of marketing'

Chief marketing officers are being urged to follow the mantra of “education, education, education”, to build stronger ties with their chief executives and ensure marketing is at the core of their company’s growth strategy.

So says a new report by McKinsey, “How the CEO-CMO relationship can drive outsize growth”, which maintains that these lessons can be well worth the effort, with CEOs who bring marketing to the forefront of their operations twice as likely to see their business record annual growth of more than 5% compared with their peers.

However, the study highlights there are three disconnects CEOs and CMOs must overcome to ignite growth: murkiness in C-level growth responsibilities, the underestimated potential for marketing to drive growth, and the misalignment of marketing measurement and business impact.

Realising the full potential of marketing, however, is not as simple as the CEO looking over at the CMO and saying “get on with it”. The big challenge is building the right dynamic between the two roles, McKinsey insists.

Redefining the C-suite
Traditionally, CMOs have been in charge of the 4Ps of product, price, place, and promotion. But many organisations have added new roles to their C-suites, such as chief digital officers, chief customer officers, and chief growth officers. The result is a blurring of marketing’s role and an overlap with other customer-related remits.

Growth requires ownership and accountability, yet the proliferation of these C-level roles in many companies means that CEOs can have multiple executives with sometimes ill-defined responsibilities for customers, growth, or both. As a result, when CEOs ask themselves who to turn to, it is not always clear who is responsible for what.

To add to the challenge, in some cases, marketing does not even have a seat at the top table, with more than 40% of Fortune 500 companies not having a customer-related role on the CEO’s executive committee.

Underestimated potential of marketing
Meanwhile, modern marketing has become increasingly complex. Consumer journeys have more touchpoints, data is at the core of every marketing activity, and technical skills are now a must-have for marketing organisations.

For example, according to the research, the number of martech solutions has doubled every year over the past five years, resulting in more than 11,000 solutions so far in 2023.If CMOs and CEOs do not actively engage with each other on a regular basis, the pace of change can outrun them.

Contributing to this gap is the fact that most CEOs lack a marketing background. McKinsey estimates that only 10% of Fortune 250 CEOs have marketing experience, meaning many underestimate marketing’s potential to create growth, despite the rapid growth in capabilities.

Marketing measurement issues
In the modern marketing era, CMOs can report endless KPIs, including cost per click, click-through rate, brand awareness, and so on. But all too often marketers speaking a complex language and drown CEOs in data instead of giving them the right measurement tools to evaluate marketing’s performance and business impact.

On average, the CEOs responding to McKinsey’s survey feel that marketing metrics clearly tie to business impact less than 60% of the time. In fact, when CEOs and CMOs of the same companies were asked what their top three marketing metrics were, they only agreed half the time.

Even worse, many executives are not convinced about accuracy. Without credible measurement, CEOs can neither track marketing’s impact on growth nor hold their CMOs accountable.

Optimal marketing measurement starts at the CEO level (for example, revenue growth) and cascades down. Marketing can ensure that operational KPIs required for managing campaigns clearly link back to the overall growth objectives.

The report states: “It’s clear that CMOs want to engage their CEOs on the value of modern marketing and its potential for growth. They don’t have to take a big swing; they can start with small steps.

“Several of the CMOs we interviewed regularly send their CEOs simple but rich articles about marketing strategy, data and analytics, and the latest innovations. Other CMOs bring their CEOs to key customer research activities, such as customer focus groups, agency media days, or even international marketing conferences.

“CEOs can be the best partners to cultivate marketing-led growth. First, the best CEOs have patience; strengthening the relationship with their CMOs is a process and takes time. Second, they are resilient. If they don’t understand something, they commit themselves to learning. Finally, they are open-minded and agile. They understand how marketing is both an art and a science and has potential to create the next frontier of growth.

“For CEOs to effectively engage on growth strategy, they also need to invest in themselves, allocating time to learn more about relevant innovations and shifting behaviours. CEOs have a trusted ally and expert teacher in their CMO.”

One former CEO at a Fortune 500 fintech company concluded: “There’s a lot CMOs can do to educate managers about the possibilities of modern marketing. My knowledge of modern marketing is a reaction to our marketing team’s implementation.”