Marketers and boardrooms have never operated in perfect harmony – and while businesses continue to view marketing as a ‘sunken cost’ rather than a valuable investment this will continue.
Recent research carried out across Fortune 500 companies found that the tenure of the average CMO is currently only half that of the average CEO, pointing to an increasing dichotomy between marketing departments and boardrooms.
There are many factors at play here, not least the constant global economic upheavals of the last 15 years, brought to a head by the post-pandemic crisis.
With boardrooms putting ever more pressure on marketers to do more with less, it is crucial that both sides are able to communicate effectively.
This means precise, bespoke measurement is key for marketers wishing to navigate the tricky minefield of the boardroom. Put simply, executives need to be spoken to in a language that they’ll understand.
Tooling up CMOs for the Boardroom Battle
In a bid to address these shortcomings, the Data & Marketing Association (DMA) released a ‘CMO Effectiveness Toolkit’ earlier this month, aiming to better equip marketers for their boardroom jousts.
The toolkit is focused on two key areas. Firstly, it aims to help marketers identify the best and most appropriate metrics for their business, and secondly, it looks to arm them with the right tools and language to ‘prove’ marketing effectiveness to executives.
The DMA’s head of insight, Ian Gibbs told Marketing Beat that the toolkit is focused on four key types of effect: “We measure business effects, the stuff that the boardroom really care about – has your campaign shifted the dial on market share, profit growth, shareholder value, that kind of thing.
“We measure the impact on brand effects, things like awareness, consideration and brand perceptions. We measure the impact on direct response effects, so short term sales, conversions footfall. And we also measure campaign effects, things that to be honest, aren’t really effects at all – eyeballs, views, clicks, like and shares.”
The metrics that matter
Streamlining these measurement tools is paramount – with 178 different metrics in the DMA database, Gibbs stresses that CMOs need to pick the right ones for their business if they are to measure campaigns effectively.
The root of the problem lies in the fact that marketers are using measurement metrics that are super-relevant to them, but superfluous to executives.
Boardrooms deal in hard numbers; they want to see tangible evidence of how a campaign has affected concrete metrics such as profit growth and shareholder value.
The DMA says that just 8% of the metrics in its databank deal with these ‘business effects’ that are crucial in communicating impact to CEOs.
Gibbs advises marketers to “stop focusing on stuff that doesn’t matter, stop talking about clicks, likes and shares, the average CEO is going to shrug their shoulders if you tell them how many eyeballs are on the ad, tell them about the impact in the business instead.”
CMOs should whittle down the 178 metrics to a key figure of around 10 that are ideally suited to their business and industry, using them to create a streamlined ‘measurement plan.’
Crucially, Gibbs points to a high net promoter score and high retention rate as metrics that are particularly linked to business effects. Drawing on the importance of keeping measurement ultra-relevant, he adds: “We encourage people to benchmark against the relevant industry sector because all sectors perform differently.”
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Short-term success vs long-term planning
Naturally, the global economic downturn has only accentuated the gap between marketers and executives, with the latter expecting more and more from ever tighter budgets.
These difficulties have led to an alarming focus on short-term success over long-term planning across the industry as a whole. Gibbs warns against this short-sightedness, noting that only so much revenue can be squeezed out of consumers in times like these.
“Over the last two years, despite the fact everyone is obsessed with short term marketing or putting more pressures on CMOS to be short term – when economic growth is low, there is only so much response that you can generate from consumers who are cash strapped.”
The dangers of such short-termism is that appealing to the lowest common denominator is prioritised over building genuine relationships with consumers. When this is the case, Gibbs notes, brands are entering dangerous territory.
“You’ve got big brands like Asos and Adidas who’ve come out in the last year saying they’ve over invested in performance marketing and under invested in brand,” he explains.
“We’re really seeing now that there is a challenge here because consumers, when you’re not building relationships with them, they’ll basically pick on price, and they’re very promiscuous, they’re very price sensitive and this is a problem with these inflationary times.”
Speak the right language
So how can CMOs and CEOs best navigate these testing times? Firstly, by communicating effectively, and as the DMA has laid out – that can only be achieved when marketers begin to speak to their CEO in a business-centric language that they’ll actually understand.
Secondly, executives need to remember that marketing is an investment, not a cost. Time and again, brands who prioritise strong marketing come out of a crisis with stronger foundations than their competitors.
In essence, siloing will get us nowhere – and even though this may seem obvious to many, it is overlooked far too often. The volatile situation the marketing industry has found itself in for several years now is a clear testament to that.
