Ad Age: Corporate CMOs Have Zero Impact on Sales
A study to be published in the Journal of Marketing that covered 167 companies including Procter & Gamble, Microsoft and Apple over a five-year period concludes that CMOs on top management teams don't have any effect on a company's financial performance, according to a recent issue of Advertising Age.
"The disheartening finding in "Chief Marketing Officers: A Study of their Presence in Firms' Top Management Teams," slated for the January 2008 issue, is sure to reignite the longstanding debate afflicting the suite: Should a CMO be judged on tangible or intangible metrics? On solid stats such as sales, or on more amorphous concepts such as brand equity or even awareness?"
The authors themselves -- Pravin Nath, a professor of marketing at the LeBow College of Business, and Vijay Mahajan, a professor in the department of marketing at the University of Texas at Austin -- admit the study is limited because it focuses on financial-performance metrics, such as sales growth and profitability, and not brand equity, and both were quick to offer caveats to the conclusion.
The common financial metrics used to measure the performance of CFOs and CEOs don't apply as well to the CMO position, Mr. Mahajan argued. "Those are very short-term," he said. "You cannot use short-term metrics to measure the performance of someone who is supposed to have a long-term impact."
Other findings:
- Only 40% of companies had CMOs in their top-management teams.
- A CMO would be in top management "when they have relatively high levels of innovation and differentiation, when they follow a corporate branding strategy, when the CEO is an outsider, and when the marketing experience of the senior management team is relatively high.
- CMOs are expended to understand how to use new media, align with the rest of the organization's imperatives and make sure the consumer is at the heart of marketing.
I would have thought that the inputs to valuing the financial performance of an organisation comes from the company's sales and marketing performances (Turnover, GP margins,Balance sheet growth, cash flow, etc). If the CMOs dont have any impact can we then say that the marketing and brand building strategies don't need leadership and direction?