Marketers on the Rise: Findings From The CMO Survey
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WILSON RAJ: Digital transformation is a fixed, yet fluid, reality in our post-pandemic world. Brands are shifting to a digital-first economy where prospects and customers expect genuinely tailored experiences. More than ever, marketers today are taking on more responsibility for digital transformation, driving business performance, and expanding their strategic leadership in their businesses.
Hi, I'm Wilson Raj, and welcome to this episode of the Reimagine Marketing podcast, "Marketers on the Rise-- Findings from The CMO Survey. I'm really excited to have our special guest, Professor Christine Moorman, who is the senior professor of business administration at the Fuqua School of Business from Duke University, where she's a faculty member in the marketing area. Professor Moorman has authored many books in this area around marketing leadership, marketing excellence, marketing expertise. One of her books, Strategy from the Outside In-- Profiting from Customer Value, with George S. Day, was awarded the 2011 Berry Book Prize for the Best Book in the field of Marketing.
Professor Moorman is also the founder and managing director of The CMO Survey, that founded in 2008. The CMO Survey is the longest-running, noncommercial survey for and about the field of marketing. And this is where the research-- where she collects and disseminates the opinions of top marketers around the world in order to predict the future of marketing and to be able to improve the value of marketing in firms and the businesses that they serve.
Now, she also blogs extensively about the survey findings at Forbes, Harvard Business Review, Marketing News, and many other publications. So with that, I'm excited to welcome our guest, Christine Moorman. Hi, welcome, Christine.
CHRISTINE MOORMAN: Thank you, Wilson, it's wonderful to be with you today.
WILSON RAJ: Absolutely, you know, I think it's absolutely-- your work since 2008 has become sort of a stalwart piece where marketing folks, pretty much all over, use as a benchmark to assess where the state of marketing is at, what is happening, but also more importantly, what needs to happen. So can you just tell a little bit about just the genesis of this project, called The CMO Survey, that started in 2008 and has been just running through up to now and I'm sure into the future.
CHRISTINE MOORMAN: Well, thank you. So the survey was really born out of frustrations that I was experiencing. And then I sensed other, actual marketing leaders were experiencing as well, which is that marketing leaders weren't being interviewed by the press or investors for their views on various critical marketplace trends or company marketing activities. Often they would ask the CFO these questions. And so I felt there was a need to get more exposure for marketers, in their role as experts, about what was going on with customers and how customers could be managed, as well as brands and other important assets that they're responsible for.
But it was also the fact that what I sensed is that-- and I think this is still a frustration for marketing leaders-- is that they don't have very good benchmarks. So when they think about going to their CEOs, or CFOs, to increase their marketing budgets, how do they know whether more budget is necessary? How can they put that into perspective? And so, that's when I developed the survey to sort of capture the opinions of these marketing leaders and then disseminate the results.
And a lot of the questions that we ask are forward-looking measures. You know, where is marketing going. What are you doing to lead marketing within your organization. But also to provide those benchmarks that I mentioned so that marketers can turn to the survey and get a sense of where they fit. Whether it's in firms of their size or firms in their industry, they can gauge how well they're doing and how much they're spending on marketing.
WILSON RAJ: Right, and so with that, Christina, great intro to one of our first sections, the notion around how-- and it's a very important part of your research-- how the marketing function. Right, and certainly it's called The CMO Survey, but I think everyone in marketing leadership, or in marketing, absolutely benefits from this.
So the context here is that, we know the context, the pandemic has prompted many businesses, many brands, to undergo just a radical, rapid transformation in their gold market models. And you've tracked those. And we are seeing in other research, but certainly in yours, that there's a sense that many of these businesses are moving past that initial, nascent phase of digital transformation maybe about a year or a year and a half ago. And becoming, you could say, more mature, they're more integrated, they're more emerging. And you're seeing that spectrum.
So the question is, what's that spectrum that you're seeing, where the people going from nascent to emerging, and related to that, the role of marketing leaders?
CHRISTINE MOORMAN: These are excellent questions. And I think, just to put it in perspective, it's important to appreciate this dramatic transformation that's occurred during COVID, and born out of necessity. Companies had to transform quickly.
And as a result, one of the questions that we've asked a few times in the last couple of surveys that look at the period over the pandemic is, how the importance of marketing has changed. And what we see there is, we see consistent reports of increased importance of marketing during the pandemic. In fact, 72% of marketing leaders reported that marketing had increased in importance.
And a big part of that, as you mentioned, is the responsibilities that they've been given in the digital area. What we report in The CMO Survey is that marketing is responsible for digital marketing in 94% of companies. They are leading those efforts not the CTO, not the chief digital officer, not the COO. It's the CMO. And the other thing is, they have led the transfer-- the digital transformations in 73% of companies. So not only are they responsible, but they led that transformation in the majority of companies.
And so you might ask, well, what are they doing? And what are some of the things that they've done? Two things really stood out from the surveys that we've done over the last year, and even this most recent one, which is that they were focused on building better customer-facing digital interfaces and also working to try to help transform their company's go-to market business models.
These are big strategic activities. Which, I think, has been really important for marketing to play a role. Because, I think, what happens is the way that we imagine marketing-- which I really like the title of your podcast-- and the reimagining of it, is that we need to think about it as a strategic function. That is the full benefit of marketing. If we think about marketing just as sales support, or promotion, or things like that, we're really not fully generating the value that marketing can bring to organizations.
WILSON RAJ: So that's actually good news. And so how are marketers sort of taking this new-found, I don't want to say notoriety, or newfound halo effect that they are involved. You know, pressures, are they stepping up to the plate? And then can talk about some of the other pieces.
CHRISTINE MOORMAN: Sure, so maybe good news and bad news. The good news is that during this same period we've asked how often is the senior marketing leader asked by the CEO, or the CFO, to participate in board meetings or earnings calls. Which, in a publicly held company, that is the upper echelon. That is the place where-- that's the seat at the table that the marketer wants, right. They want to be advising in those critical situations. Also strategically, but here, in these situations when they are managing this key stakeholder, it's important.
And what we find is that those average participation rates are a lot higher, actually, than I think most people would expect. 43% of companies say that marketers participate in board meetings all the time. And on a 7-point scale, the number is about five, where seven is all of the time, and one is none of the time. Now the numbers are slightly smaller for earnings calls, which you might expect, but they're still healthy. They're sort of average rates.
So I think that's the good news. I think that the challenging news for marketers is-- it's really a story that challenges all companies going through this digital marketing transformation-- which is that there still is work to be done. That to really get the full benefit of the digital marketing transformation, we do need to move beyond offering non-integrated digital elements to fully institutionalize digital investments that really can drive marketing decisions all the time.
I think most companies are still stuck back at this kind of non-integrated stage. So the work of the marketing leader, then, is going to be really an internal marketing job, if you will. To fully get the organization to embrace this big change. And to then have its tentacles reach all the way across the organization because that's where you get-- first of all, that's where you see that marketing really is a panorganizational superpower. And second, that that's where you really get the full benefit of your digital investments.
WILSON RAJ: Right, this notion around those changing expectations around spend and marketing investments, I think your data points around the increase in the number of marketing leaders asked to participate in earnings calls, right, or board meetings. That's, again, a testament to driving that strategic digital transformation.
And that they actually-- it's funny because in the press, in the popular press, you don't, frankly, I don't see that a lot. It's always-- maybe the tune is changing-- but it's always sort of, oh, here's the short tenure of the CMO. The current one right now might be a little bit longer than whatever it was two years ago. But these encouraging results really show that marketing leaders are slowly but surely earning a seat. And you talk about the improvements.
I'd like to pursue one more line. In the past, we used to say the best buddies for the CMO, for her, it would be the CIO because marketing and technologies go together. And there's something that you said, there's now a new person and that's a new best friend, if you would, the chief financial officer.
So could you talk to that, in terms of that you talk about marketing being a panstrategy, cross-functional. What are some of the things that you have seen in your research, anecdotally, in terms of that CFO and CMO construct? Although, rather than just, hey, I need to justify my budget. Does it go beyond that?
CHRISTINE MOORMAN: That's a good question. So maybe what I can do first is drop in one quick benchmark data point that I think marketers actually will find useful. It's probably the most-used data point in The CMO Survey, which is that we find that marketing spending is, on average, about 12% of overall company budgets. So if you take the full company budget, marketing spending is about 12%. And it is about 9% of company revenues.
So for marketers out there who are trying to get their handle on where they sit on that budget spectrum, those might be useful numbers. You can also go deeper into some of the firm and industry breakout reports where we say, OK, if you're a software company, if you're a health care company, and look to see what those budget figures are. But those budgets are-- they sort of, I mean, they fluctuate a little bit, but those numbers have stuck around for a long time now, for more than seven or eight years. So that's kind of one number that marketers can put in their pocket and turn to.
But here's the problem. And this is the problem that you are referring to, which is that marketers do get a lot of pressure from CFOs, and CEOs, to prove their worth. And the pressure is really not the problem. I think the problem is that these non-marketing leaders tend to focus-- they tend to think about marketing as a short-term effect. So they look for the short-run effect of marketing spending, and they're not really patient for the long-run effects of marketing spending.
And so that's the job I think that the marketer needs to take on. They need to really embrace the opportunity to educate the c-suite on where they can provide value. And I think that part of that involves building a business case with the CFO that really does focus on those longer-term effects. And we did some additional interviews, both with Deloitte and with Google, on one of their big organ future studies. And some of the findings from the survey, together with those interviews, point to just maybe a couple of things that I'll point to.
First, having a real business partnership with the CFO, to think about that as a relationship, as you mentioned, that needs to be engendered. And that means saying, this is how marketing really connects to the firm's business strategy. And also, to meet with that person regularly, not just at big senior management meetings but outside of those meetings, to explain what you're doing, what is your hypothesis, if you spend in this direction what do you expect will happen.
WILSON RAJ: That's a good one, Christine. So getting the CFOs buy-in into the marketing strategy rather than looking at it as like, all right, I need to justify to the executive. Here's my budget and then defend. It's actually to co-create with the CFO. So that's definitely a shift in mindset.
CHRISTINE MOORMAN: Yeah, that's a great way to put it. And one thing that can help marketers do this is to run experiments. These can be very small-scale. They can be on a website. They can be in a lab. You can do surveys-- sorry, do experiments in so many different ways. They're so very uncommon for many marketers. But they're a nice way to show, if we take this action, we see this lift over baseline because we have a control condition. So running those experiments is really important.
And then finally, I think marketers tend to pay attention to-- and marketing leaders also-- tend to pay attention to those shorter-term effects that marketing can have. So I think what we came to was this idea of creating a full-funnel view, that really showing the effect of marketing across the funnel.
So you have to spend at the top of the funnel because you know that it's going to really pay off at the bottom. So you see that longer-term effect on whether it's customer retention or customer purchase. To start with, customer retention, the value of the brand, all of those require that the company spends. But if you don't pull that thread all the way through the funnel, then how is anyone going to see what that longer-term effect is?
WILSON RAJ: Right, absolutely, so that long view. I think that constant pressure, especially public firms and quarterly earnings calls, where there's that short-term pressure, but then to have that long view and balancing that.
Just something popped into my head here. Are you seeing sort of similar strategies for both what I would call digital natives-- so like the Ubers of the world where they started digitally. That's their mindset and their whole business model, and the ecosystem is predicated on that. And then the others who were traditional and then have now digitized. Are you seeing similar kinds of behaviors? Or the digital natives, they have this pretty much locked and loaded?
CHRISTINE MOORMAN: I think the latter. I think because they've set up the metrics. The systems are set up so that they feed back into the decision making that's going on. I mean, this goes to one of the topics that I did want to talk with you about, which is metrics. And what we actually find, it's very surprising.
We find that when we asked marketers to rate a whole, I think, 26 different metrics. Like, how frequently do you do certain things. The top, the most used, metrics were all things like sales, revenue, customer engagement, digital, web, mobile performance. Those were highly used, which is great.
What was very weakly used were things like customer lifetime value, brand equity, even measures of brand differentiation. Things that should really be part of-- you should be measuring these things regularly so that you can actually, first of all, show what marketing is capable of. If you're not measuring these things regularly, how are people going to know where marketing is having its effect.
But also, it doesn't really-- it also hurts the ability to make the case for marketing spending. So I think the idea that we need to expand the number of metrics that we ask-- I mean, these were used, for example, brand equity was the lowest of all of these metrics. Which is really surprising given what we know about the value of brands.
WILSON RAJ: Absolutely, and especially if 2020 and suddenly this, 2021, and I think moving forward into this post-pandemic world. Where that brand equity, the longevity of the brand, the transparency of the brand, all the things are critical factors beyond just delivering your products and services or engagement.
So I think there's a huge learning, I think certainly in your research, around the most used metrics which are very near and dear to the marketer's hearts-- in terms of content, lead gen, conversions, those kinds of things, to something. And then aligning it from a financial measure to the strategic value-- speed to market, agility, you mentioned CLV, or customer lifetime value of profitability. And then drawing the comparisons.
So I think the big takeaway here is that marketers need to convert marketing metrics to business metrics as best as they can and show the lineage, or the linkage to those things, upstream and downstream. And clearly some companies are doing better than others. But I think some of the things you outlined there are really helpful.
CHRISTINE MOORMAN: Absolutely.
WILSON RAJ: So just as we kind of talk about marketing growth, you also identify beyond the metrics there were certain behaviors that marketing leaders were doing. They were sort of that common behaviors that was helping to drive the marketing side of the business. But also there are other less-common behaviors, just like the metrics you talked about. Can you illuminate us on that, in terms of how that maps into marketing growth and proficiency.
CHRISTINE MOORMAN: Absolutely, well, one of the things that I talk about a lot in my class is that I think business people in general-- and I would put marketers into this group-- they tend to be sort of captured by their own industries. Which is fine. I mean, they do need to know what's going on in their own industries. But a lot of learning and a lot of growth opportunities can come from looking at other industries.
And so what kinds of business model changes are these companies engaged in. What kinds of marketing activities are they engaged in. Where there's-- the company can learn from it and import it into their own strategy. I mean, historically, there's lots and lots of examples of companies doing this. But I think it takes time to step out and say, wow, what is this company doing that could have implications for my business.
There's a great example, the person who did the first rotating sushi company in Japan. We all know the-- I think it's YO! Sushi, is the very popular one these days. But this was in Osaka, the founder of that concept. Where did he get his idea? From a local Asahi brewing company where he watched the beer bottles go around on the conveyor belt. And it struck him that this was a way that he could bring some novelty to his shop. Now he had to transfer that knowledge from a very different area, from a factory into a retail, into a restaurant, but still.
I think the opportunity here-- there's many, many opportunities. So I think keeping your blinders down is important. Letting some of those cross-industry opportunities seep in is really important. I think also, machine learning, using machine learning and leveraging it for growth is really important.
And we find that marketers really aren't using artificial intelligence or machine learning as much as they probably could. They're only using it about 11, about 12% of the time. They report to us in The CMO Survey. They expect that to triple to about 38% of the time. So we ask them, in all the decisions that you make, how often are they being driven by artificial intelligence or machine learning. So only 38% of the time over the next three years.
So I think the key thing here is that they think about where they can lean on their martech stack to identify opportunities for automation and augmentation when they're trying to personalize their customers' experiences because it shows that there's still a lot of opportunity there.
WILSON RAJ: Now, beyond some of the things that we talked about, what do you see emerging from your research around some of the drivers of what future marketing leadership would look like?
CHRISTINE MOORMAN: So there's a couple of things that I can point to. One I just wanted to-- I think a theme for me for this discussion is that marketing is so much more than just creating short term sales. It's about creating valuable customers and creating valuable brands. And just one statistic that I've shared widely that I think is important is-- this was based on a study that we published in the Journal of Marketing.
And what these researchers did was, they created a portfolio of companies that scored high on customer satisfaction as measured by the American Customer Satisfaction Index out of the University of Michigan. And they compared that, basically, to just the market returns. And what they found is that over a period of about 14 years, from 2000 to 2014, the companies that performed, had the higher customer satisfaction ratings, were able to achieve a 518% return compared to the 31% return for the S&P 500 during that era.
So big picture, marketing really does matter in a strategic sense. And this is looking at the stock returns that are associated with companies. And so keeping that in mind is important.
And maybe just two quick things that really stood out to me in the survey. One is this very surprising finding, which is that for the first time in a decade we saw that traditional advertising-- this is sort of like radio, TV advertising-- became positive for the first time in a decade. So the last time it was positive, in terms of growth rate, was 2011 when it was 1.3. And then it's been negative growth over the last decade. It re-emerged as positive here in August 2021 when we measured it at 1.4%.
So I think what-- it remains to be seen exactly why. My speculation is that marketers are finding that there's a lot of digital clutter out there and they're looking for ways to break through, podcasting, for example. I mean, you may have sponsors for your podcast. I don't know if it's just SAS or if it's other companies. But they need to break through, and so traditional advertising is one way that they can break through. So that's one topic that I thought I would discuss.
WILSON RAJ: Along with that, we've also seen more of that emotional empathy and caring as it's expressed to diversity, and equity, and inclusion. Not just in the brand but also in the way that you go to market. So for example, in the finance sector, we've had some conversations with folks where, how do you serve the underserved in banking, people who don't have access, people who are in dire straits? And really help them along with advice, with empathy, with information, with guidance.
So we're seeing that happen, and certainly in the CPG place as well, spots, as well. So I think your research kind of touched a little bit. Can you speak to that? And is that also another element for the next level of marketing?
CHRISTINE MOORMAN: I think so. And I do have some data I can share with your listeners, which is that marketers, marketing leaders, report that they'll spend about 11% more, and-- they spent about 11% more over the last year on DEMM. So it is something that's very salient to people. And we've asked these questions a couple of times.
We see a shift, which I think is really an important shift. We see a shift to where marketers were focused more on external things like communication and brand, which was more the primary emphasis maybe six months ago. This most recent survey shows that it's shifting to, more attention is being paid, to things like segmentation and targeting, products and service design, partnerships, things that are more at the-- other aspects, other important aspects of marketing. So we see that shift.
But there still is work to be done, as there always is. And so just two points on that. We find that most companies don't have very strong processes for making marketing decisions that send those decisions through a DE&I filter. So on a 7-point scale, when we ask people to rate their companies, where seven is very highly, do they have this process, versus one, not at all. We find a mean of about 3.5. So with fully 23% of companies say they don't do it at all.
So without that kind of filter it's hard to correct decisions that are going to not be DE&I sensitive. And so, and also, we find that fewer, too few, companies have really changed their marketing strategy to reach more diverse customers. Again on that 7-point scale, a 3.4. Companies just have not shifted away from their core customers to think about a more diverse set of customers.
So we asked where's the bottleneck? What's the trouble? Why aren't you doing more? And there were two things that emerged. One was the difficulty of assessing the value of those DE&I opportunities. So marketers are worried about if they have that marketing dollar to spend. If they can't really prove the business value of DE&I, even though it might be the, quote unquote, "the right thing to do," they have some concerns about spending that. They like to be able to prove the value.
But then the other part of it is-- and this is, I think, a real opportunity. It may be the basis of a whole other podcast, which is envisioning those opportunities. You know, like how do they-- how do they actually come up with what those DE&I opportunities are. I like the "serve the underserved" idea that you shared about banking. But how is it that those ideas are generated? I think marketers are struggling with that.
WILSON RAJ: You know, I think that, fantastic, this is really, I think, a great spot to kind of end on that note. And I think the big takeaway here, from your research, Christine, is that as the marketing function continues to evolve, marketers will be called on to provide even more strategic direction across digital investments, performance, and certainly brand building and brand value efforts. So I think leveraging deep knowledge of a customer, certainly aided by technology such as data analytics, AI, helps.
But I think the bigger story here is really that mindset of experimentation, looking beyond your organization, or even the borders of your team, and then to be able to get that spark of innovation. So thank you so much for joining us, Christina. It was great to have you on the show.
CHRISTINE MOORMAN: Thank you, Wilson. It was my pleasure.
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WILSON RAJ: Absolutely. Now if you enjoyed today's show, be sure to head on over to sas.com/reimaginemarketingpodcast-- all one word-- to join in the conversation and discover our fantastic bonus content. Now you can certainly subscribe to the series on your favorite podcast platforms. Just search for Reimagine Marketing on your platform. And again, thank you for listening and joining us. We'll hope to see you again on another episode of the Reimagine Marketing podcast. Have a great day.
