CMOs are winning trust but still falling short in transforming companies, according to CEOs

ORIGINALLY PUBLISHED In Digiday

By: Michael Bürgi

Boston’s Charles River may be famous for rowing, but it can be a single-person or multi-person sport. And, as Boston agency Boathouse’s fourth installment of its CEO study on marketing and the CMO revealed, the team sport can yield better results for companies, while individual efforts can sometimes fall short. 

The big picture, the quantitative report that surveyed the CEOs of 150 companies in tech, healthcare, finance, retail and other areas, sheds light on a general improvement in relationship and trust between the CEO and his or her CMO, while still pointing out sizable gaps in a couple areas of execution, expectation and delivery, said John Connors, Boathouse’s CEO.

“The pattern towards ROI, data and performance over the last few years — coupled with CMO tenure still on the decline — has marketers trying to go into prevent defense and trying to figure out things where they can justify their existence and their expense and budget,” said Connors, “whereas just helping the CEO execute their strategy is sitting right in front of them. With all the news out there over the last four or five years about tenure, I think CMOs are wise enough to say it’s time to work on this.”

This year’s installment took more time to understand the CEO’s position as it relates to leadership as well as marketing. One troubling insight in this era of drastic transformation brought on by the after-effects of the pandemic as well as the onslaught of AI: 87% of CEOs say they have yet to fully realize their transformation strategy — in fact, averaged out they’re only about halfway there. And while growth and profitability dominate their priorities, there’s a void created by a disconnect between financial performance initiatives and organizational health issues. 

CEOs tend to blame external forces — specifically economic conditions, competitive pressures, and financial market dynamics — as the primary obstacles to strategic execution.

The good news is their relationship with the CMO and marketing department is getting better. CMOs got an “A” or “B” grade from 71% of the CEOs that responded, while the number of CEOs that said their CMO was best in class rose from 21% in the first year of the study to 45% this year. Still, gaps remain in their efforts and the payoff.

“The majority of CEOs say they’re [barely] halfway to their strategy goals,” said Connors. “But how CMOS approach a CEO, and how they help them, ties so much to who’s helping that CEO close that 50%, and who’s just a drag on them. They’re starting to see the CMO as helping more, but marketing is not helping enough.”

There’s a soft power dynamic at play in the research as well, with CEOs exerting tight control over growth and profitability but struggling with issues around culture, which can be debilitating for a company if it goes off the rails. The study cited employee morale and culture as the most pressing or relevant issue, at 65%.

“CEOs all know how to drive growth and profitability but they [often] don’t know how to get the people to love them and [make] the culture of the place great,” said Connors. “But if you just race past those variables on your way to the market to get ROI to prove that you’re worthy and you blow past the employees and the culture of the organization, you’ve left really important stuff behind.”

Around the growing issue of incorporation of AI into company practices, CEOs still tend to believe marketing and CMOs are playing it too safe. But the most surprising stat on this topic, Connors noted, is that marketing was the No. 1 user of AI last year — in large part because ChatGPT had just exploded on the scene — but this year it ranked eighth. 

“People are starting to get religion that it’s not just a downstream execution tool to replace creatives and productivity,” said Connors, “but actually is a tool to be able to look at the market strategically and see it at scale that you can’t with a quant study or qual study.”

Connors said a new Gartner study that came out in February largely confirms some of what Boathouse has found about the relationship between CEO and CMO. Gartner’s study, however, takes a more negative view on the relationship between the CEO/CFO and the CMO. Nearly 70% of the 125 respondents to that survey said CMOs “failed to deliver promised results from marketing strategy.”

“CMOs need to clarify their role in growth initiatives and improve collaboration on key initiatives,” said Sharon Cantor Ceurvorst, vp, research at Gartner Marketing Practice, when the study was issued. “By understanding stakeholder priorities and demonstrating strategic insight, CMOs can enhance their influence and contribute more significantly to corporate strategy.”

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