Are CMOs a dying breed?

From the C-Suite newsletter: CMOs face greater instability because, for better or worse, their roles offer more strategic flexibility to their organizations.
exec

This story appeared in Strategy C-Suite, a weekly email briefing on how Canada’s brand leaders are responding to market challenges and acting on new opportunities. Sign-up for the newsletter here to receive the latest stories directly to your inbox every Tuesday.

Is the CMO function on its way out?

That question was recently posed to close to 700 senior marketers, including 36 from Canada, to which the answer was “maybe” – 19% of global and 11% of Canadian marketers said they believe the CMO role won’t exist in 10 years’ time.

Considering the research was conducted prior to the pandemic, one is left wondering what effect slashed revenues and strained marketing budgets may have on CMOs’ perception of their value among other members of the C-Suite.

In recent years, the CMO title has come under greater scrutiny. Last year, for example, the elimination of CMO roles at a handful of major organizations prompted Forrester to predict a rise in the number of chief growth officers – and other adjacent titles, such as chief customer officer – in 2020.

But as Peter Rodriguez, founder and CMO at Brand Igniter points out, the question of whether or not the CMO label exists in ten years’ time is beside the point: “The core of the [matter] is the function of the CMO, what the true CMO does, will still be needed.”

Across the industry, Rodriguez has seen the pendulum swing between companies consolidating marketing duties under a single role – either the CMO, chief growth officer, or another title – and dividing those responsibilities among two or more remits.

That appears to have been the case at Kraft Heinz, which recently eliminated the CMO position, after elevating former CMO Dana Somerville to chief growth and sustainability officer in December. As reported in strategy on June 30, Somerville has since left the organization, and many of her duties have been assumed by Federico Arreloa, its new chief brand and category officer.

Rodriguez, a former CPG marketer at major brands like Smucker Foods and Johnson & Johnson, is not surprised by the frequency of changes across the industry’s marketing departments, as there are several factors driving decreased stability around CMO roles.

“The more short-termism there is, the less consistent expectations [are] for CMOs, the faster they will go away,” he says. “That has happened a lot in Canada and in the industry.”

Rodriguez points out that average CMO tenures have fallen far behind those of other execs, including CEOs and CFOs. For example, according to Spencer Stuart’s annual CMO Tenure Study (based on leadership changes at the 100 biggest advertisers in the U.S.), in 2019, CMOs could expect to remain in their role at a company for only 41 months – down from 43 months the year before. Their positions are among the most volatile in the C-Suite, with more than 60% holding their corner office for 36 months or less.

“The other factor is the erosion in understanding that marketing is indeed brand management at the core,” adds Rodriguez. While brand management encompasses product innovation, pricing, distribution and promotion, many companies relegate marketers’ duties to promotion and marketing communications – in short, they lose full P&L accountability. “I see so many CMOs who are reduced to campaigns, communications, technologies,” he says. “In those cases, it’s just one small part of the whole.”

He adds that there’s “an opportunity for the CMO role, whatever its name is, to be reappraised as one of the roles that can put together all those big complex decisions centred around the consumer.”

According to Rodriguez, CMOs face greater instability within organizations because their roles offer more flexibility, depending on the strategic needs of the business. “At the end of the day, it’s a matter of how much an organization has an appetite to grow the business in the short and long-term that will determine how flat the organization will be.”

Strategy must shape the structure of the marketing team – not the other way around. When the strategy calls for a more market-centric approach, organizations typically employ a local CMO to bring a “level of sophistication” to its marketing, he says. When the strategy calls for more regional or global alignment, consumer decisions tend to be outsourced to a global or regional centre of excellence.

“Some organizations decide that they need to win in a specific market and therefore the focus on local drivers and inhibitors will be much more evident,” he says. “When the corporation says, the role of this particular business is more of a contributor to the growth of other regions, then you probably wouldn’t have that level of sophistication in place.”

Having a flatter, more nimble and responsive structure makes sense when aligning with a regional or global strategy, he says. But when the organization wants to gain significant market share or establish new categories, then a highly trained CMO function that incorporates all consumer-facing decisions, such as distribution, pricing and promo, makes more sense.