Study Finds CMO Tenures On Decline, Most At-Risk Execs

by Erik Sass, Aug 28, 2006, 8:01 AM

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It's tough at the top. The average tenure of chief marketing officers at America's 100 biggest consumer-brand companies continued to decline over the last three years, according to head-hunting firm Spencer Stuart. But the dark cloud threatening marketing execs holds a ray of hope: a select few succeed by redefining corporate hierarchies and assuming more power and responsibility, reports consulting firm Booz Allen Hamilton.

Yet the overall numbers aren't optimistic. Over the last three years, says Greg Welch of Spencer Stuart, average CMO tenure has declined from 23.6 months to 23.2 months. This figure is just over half the average tenure of a CEO, and a slightly higher proportion of the average employment of CFOs and CIOs. Bottom line: CMOs are getting less time to prove themselves--and being fired more often.

Spurred by the high turnover rates among CMOs, the Association of National Advertisers commissioned consultants at Booz Allen Hamilton to survey 2,000 marketing executives about the structure, practice, decision hierarchy and marketing capabilities of their companies. Summarizing the results of this study, Ed Landry--a Booz Allen Hamilton vice president--says the basic problem is the disconnect between CEOs and CMOs at a time when marketing is viewed as critical: "While marketing is becoming increasingly important in organizations across industries, the CEO agenda and marketing priorities are not aligned."

However, Booz Allen discovered a small subset (about 9 percent) of CMOs enjoying longer tenures. "We found that some of the marketers had a higher correlation with growth and profitability," notes Landry. And while the companies' brands and products varied widely, these CMT "growth champions," as Booz Allen calls them, all share a few characteristics. They enjoy close relationships with their CEOs, aggressively pursue accountability, and aren't afraid to reach into neighboring fiefdoms that are traditionally outside their domain.

In fact, these "growth champions" are 20 percent more likely to return exceptional revenue growth and profitability than other executives.

Booz Allen's report studied the business environment most likely to elevate marketing executives, charting audiences' resistance to ad growth, competition for customers, line extensions that proliferate without benefiting brands and ad costs seen as "increasingly burdensome."

The way to ensure success, Booz Allen suggests, is the elevation of marketing to strategic parity with other corporate disciplines, a move justified by marketers' savvy for analyzing ROI. The reason? The Internet has provided a variety of new data streams--which, along with refinement of existing metrics, allow marketers a grasp of basic ROI. This is the first characteristic of BAH's "growth champion": "They can identify their contributions to revenue growth, and they gain added authority from their ability to define return on investment (ROI)."

Still, Landry observes that many marketing organizations and CMOs are still struggling with accountability. The current metrics and approaches used to measure return, he says, are insufficient. "In many organizations, there is no consistent definition of ROI; they're using rules of thumb, they're using guidelines, and in many cases, they're using surrogate metrics. They may be looking at awareness, or household penetration. This is not ROI."

Overall, Landry says, more passive or limited marketing organizations still predominate--with bare bones "service providers," for example, handling basic communications, or "best practices" shops taking a mostly consultative role.

Booz Allen traced the emergence of the "growth champion" model to the 1994 appointment of Louis Gerstner, Jr., then CEO of IBM. He created a system in which "central marketing defines corporation-wide marketing plans and objectives."

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