CMOs Increasingly Take a Leadership Role as Companies Focus on Growth

Contribution to business growth emerging as most important measure of marketing success.

New York, NY, May 30, 2006 – Marketing organizations that take advanced roles in their companies and lead such non-traditional  activities as innovation and strategy contribute to superior corporate performance, a new study by the Association of National Advertisers (ANA) and Booz Allen Hamilton has found.

The study found that marketing organizations can be classified into six basic categories – but only one category correlates with better performance: “Growth Champions.”  Marketing departments in this category are 20% more likely to exhibit superior revenue growth and profitability than those in the other five categories.  However, only 9% of marketers fell under the Growth Champion category.

• Download a PDF copy of the ANA/Booz Allen study entitled, "Growth Champions"

While most marketing departments are proficient in traditional marketing skills, such as communications and advertising, Growth Champions take on additional roles – holding primary authority over large strategic investments, leading innovation activities, and spearheading growth initiatives with their company’s CEO. The research suggests that more Chief Marketing Officers and their teams are moving to develop and deploy their advanced capabilities.

“In today’s business environment, growth is the critical marketing metric,” said Ed Landry, Vice President at Booz Allen.  “Our research has revealed a structure that can reliably produce higher growth in both revenue and profits.  This creates a clear-cut mandate for marketing executives everywhere:  upgrade your capabilities, assume a greater leadership role and position marketing so it can be a primary driver of your organization’s growth agenda.”

Michael Palmer, Executive Vice President of the ANA, said, “For marketers to successfully migrate into a Growth Champion role, they must be metric-oriented to be seen as ‘owners’ of their company’s key growth-support functions. It’s critical that they play a greater role in strategic growth initiatives and develop significant general management skills while also applying financial and analytical expertise to guide large, growth-oriented investment decisions.”

An online survey asked 2,000 marketing executives about the structure, practice, decision rights, and capabilities of the marketing departments at their companies.  The survey builds on earlier ANA/Booz Allen research that identified a disconnect between CEO and marketing objectives, and documented high rates of marketing department reorganization and CMO turnover.  The new study sought to identify correlations between specific types of marketing organizations and the financial success of their companies. The results will be published in the Summer 2006 issue of strategy+business, the quarterly magazine published by Booz Allen.

The study found several distinctive characteristics of Growth Champion marketers, including:

• Seventy-five percent indicated they helped the CEO develop the strategic growth agenda, versus 38% of all respondents.
• Eighty-one percent presided over product innovation and business development, compared with just 10% of the rest. In fact, half of the respondents in the other categories overall reported no involvement in these activities.
• Over 80% approve large, growth-oriented investments such as market-entry or product launches while less than 10% in the more traditional categories had this same authority.
• Eighty-seven percent make major strategic positioning, channel strategy, pricing, and communications decisions, and 98% lead other functions such as sales and finance on growth initiatives.

Along with Growth Champions, the data revealed five additional marketing organizational models, each uniquely associated with firm growth: 

Marketing Masters (38% of respondents):  Develop and lead large company-wide marketing efforts, help set company priorities, and may be highly regarded for their marketing skill sets.  While they do deliver better revenue growth and profitability than several other types, these levels fall short of what is proved possible by the more highly-evolved Growth Champion model.

Senior Counselors (17%): Serve as primary advisors to the CEO and business units on marketing strategy but rarely step up to become involved in product innovation or new business development.

Best Practices Advisors (9%): Marketers work with individual business units to bring “best practices” to advertising, promotion, and public relations activities.  While all but 5 percent of the companies following this model are profitable, their levels are not as high as those of the Marketing Masters or Growth Champions.

Brand Builders (12%): Provide marketing services such as communications strategy, creative output and campaign execution. The marketing organization’s role in leadership and strategy are negligible, and only garner revenue growth and profits on a par with industry averages.

Service Providers (15%): Offer advertising, promotional and public relations services, responding to brand and product teams. Companies that fell into this category had the highest correlation with below-average revenue growth.

Responses to the survey showed greater percentages of Growth Champions in brand-driven industries such as consumer products, media, and telecommunications.  Marketing teams that have more limited strategic roles (Best Practices Advisors and Service Providers) were more numerous in financial services and utilities. Growth Champions are also more likely to be found in smaller companies, with the highest percentage associated with companies with revenues under $1 billion.

Methodology

An online survey designed for marketing departments called the Marketing Profiler was completed by more than 2,000 marketing and non-marketing managers of mostly publicly traded companies. About half of the respondents were director or manager level and 40 percent at vice president, senior or executive vice-president or C-suite level. Approximately 60 percent hailed from marketing teams with the balance working in other corporate functions. 

The survey tool remains online at www.marketingprofiler.com, for companies to diagnose their own marketing organization’s effectiveness.