The CMO Quandry: Short-term Growth Priorities Undermine Long-term Transformation Goals

U.S. CMOS AMONG THE GLOBAL LEADERS IN BUDGET, DATA EXPERTISE AND SOCIAL PURPOSE

·         Eight-out-of-10 CMOs believe the shift to digital means they must transform, not just optimize, their business and that marketing functions must take more responsibility for innovation in the future

·         However, transformation and innovation are ranked as least important roles for the marketing function

·         Key barriers include: the need for short-term ROI, lack of capital investment and competing internal agendas with other C-suite leaders

 

NEW YORK — Dentsu Aegis Network’s 2019 global survey of 1,000 CMOs and senior-level marketers highlights a growing challenge for marketing leaders as they seek to move beyond optimization and drive business growth through digital transformation.

Eight-out-of-10 participants surveyed, recognize the imperative to take for business transformation through product and service innovation over the next 2-3 years, especially in the face of digital disruption. However, CMOs are finding it difficult to make this shift putting ‘Business Transformation’ and ‘Disruptive Innovation’ at the bottom of their list of functional priorities for the second year running. 

Despite the desire to achieve long-term transformation goals, short-term growth is the No. 1 priority. According to the majority of respondents (64% of U.S. CMOs and 61% globally), the primary goal is driving business growth.

Digital Transformation: A Performance Gap Emerges

Across a spectrum of marketing capabilities, CMOs were asked what they believe to be important to future success, versus their current ability to execute. The data shows a significant gap emerging between the two:

·         85% believe creativity is critical to future business success, while only 54% believe they are delivering well today.

·         83% identify the importance of seamless customer experience and commerce across channels, yet only 60% believe they are developing this capability well.

·         The divide is quite stark in data management and analytics, where 84% identify these capabilities as important to future success with only 49% are confident in these capabilities today.

·         The U.S., however, ranked more favorably than most when it came to extracting insights from their data. Only 43% said it was difficult to do so compared to 54% of global marketers. Yet 52% said they don’t have the capabilities (e.g. people, technology) to maximize the value of their customer data.

·         U.S. CMOs were more focused (79%) on aligning their brand with social purpose than many other countries (72% was the global average.)

“Short-termism” and softening investment create a barrier to transformation

An inability to secure long-term investment is cited as the most significant barrier to delivering on marketing strategy (rated as a top three concern by 50% of all CMOs) – ahead of both access to talent and competing boardroom agendas. What’s more, two-thirds (64%) say they expect to come under further pressure to demonstrate tangible short-term results, while nearly half of those surveyed have a marketing strategy that plans ahead for only two years or less, reflecting a business focus on near term goals. U.S. CMOs, specifically, are planning an average of only 2.39 years out.

Softening spend may be compounding these pressures. At the global level, the outlook for the next 12 months is mixed with 41% of CMOs reporting budgets as flat or declining, despite growing revenues (64% of respondents reported revenue growth over the same period). U.S. CMOs, however, were bullish on budget with 61% saying that they expect to see an increase of 5% or more.

Other key challenges included: lack of integration across all elements of the customer experience (per 49% of U.S. CMOs and 41% globally), insufficient control over digital investments and programs (38% U.S./36% globally) and competing C-Suite agendas (30% U.S./27% globally). 

 

Dirk Herbert, Chief Strategy Officer, Dentsu Aegis Network, U.S.:

“While modern CMOs are acutely aware that they need to drive business transformation, inclusive of ownership over product and service innovation, they continue to struggle with how to prioritize that against traditional marketing capabilities. The necessary resources to do both are cited as a stumbling block, with pressure to deliver in the short-term sitting ahead of investing for the future. Additionally, they cite needing stronger capabilities to extract and use data more effectively and the importance of creativity to engage customers. This is an opportunity for agencies to partner even more closely with marketers, as they work to fill the gaps and help create deeper engagement, connections and relevance among consumers now and into the future.”

The global “Make Change Real: CMO Survey 2019” was conducted by Kadence International across 10 markets (100 from each): Australia, China, France, Germany, Italy, Japan, Russia, Spain, the United Kingdom and the United States.