The CMO Survey Blog

The Utilization Gap: Big Data’s Biggest Challenge

March 19th, 2013

Big data’s the buzz. It’s in the press, all over the web… heck, it even has its own hashtag– #bigdata. CMOs recently reported that the percent of their companies’ marketing budgets devoted to big data will increase from 6% to 10% over the next three years. Multiply this 66% increase across all of the other areas Big Data is showing up in companies (e.g., supply chain management) and you have a sizable strategic expenditure. The bigger the company, the larger this increase. In data collected from The CMO Survey, companies with sales revenue of $10B or more will spend 13.7% of marketing budgets on marketing analytics in three years while companies with sales revenue of $25M or less will spend 9.2%.

Despite this big spend, there are reasons to worry that Big Data is not delivering its full strategic wallop. When asked to report the percentage of projects in which their companies use marketing analytics that are available and/or requested, CMOs report a dismal 30% usage rate. This number has decreased from 37% a year ago. So while companies are spending more on Big Data, less of it is being used. (more…)

Keywords: big data, marketing analytics, The CMO Survey, utilization

Bulls, Bears, and CMOs: Predicting the Future of Markets

March 19th, 2013

From reading the press, I think it’s fair to say that we look to members of the financial sector to tell us where the economy is going. These soothsayers read the tea leaves using metrics like interest rates, capital expenditures, unemployment and stock market reactions. This is all well and good, but it is incomplete. I think it is also wise to tap into the collective wisdom of marketing leaders who have their fingers on the pulse of the market’s biggest engine—customers.

In the February 2013 CMO Survey, 468 U.S. CMOs rated their optimism for the economy on a scale of 0 (lowest) to 100 (highest). The average score was 62.7, which is up from 58.4 in August 2012. This ~10% increase is important but a set of follow up questions tells us even more. Specifically, CMOs were asked to state whether they were “more optimistic,” “less optimistic,” or “no change” compared to the prior quarter. In August 2012, results indicated that uncertainty was rampant with about one third of the sample more optimistic, another third less optimistic, and the final third no change (see Figure 1). Results of the February survey indicate that CMOs who were more optimistic increased from 29 percent of the sample in August 2012 to a whopping 56 percent in the current survey! This 93 percent increase offers a very strong signal that economic uncertainty is fading. (more…)

Keywords: customer metrics, economy, prediction, The CMO Survey

Marketing in a Technology Company: GE’s Organizational Platform for Innovation

February 1st, 2013

This post was co-authored with Anna Chavis and Jace Moreno, MBA students, Fuqua School of Business, Duke University.

At a recent roundtable discussion at Fortune’s Most Powerful Women Summit, Beth Comstock, the Chief Marketing Officer of GE, described how GE approaches marketing: “You have to create a platform that invites innovative ideas.” Unfortunately, we teach marketing and many companies approach marketing as if the organization does not exist. As a result, marketing often fails because it sits outside, or is layered on top, of the most important activities in companies. Marketing needs to be down in the trenches and marketing leadership needs to foster a culture of innovation that creates new products, new services, and new customers.

GE has written this approach into its DNA. In particular, GE’s culture ensures that technological innovation (the historical backbone of GE) and commercial innovation (managing with deep consideration of the customer’s needs and wants) are inextricably entwined. We interviewed Beth Comstock during her visit for the Distinguished Speaker Series at the Fuqua School of Business, Duke University. From this talk and from other press accounts, we derived four capabilities that constitute GE’s organizational platform for innovation. We discuss these capabilities and offer examples of the new products, services, and customers that have resulted.

Capability 1: Create Marketing Innovation Internally

A big feeder of GE’s marketing innovation is the ECLP—Experienced Commercial Leadership Program—GE’s first externally focused leadership program. ECLP began in 2002 as part of Jeff Immelt’s commitment to grow GE’s commercial pipeline and aims to position GE as the “gold standard in marketing.” The two-year post-MBA program develops a pipeline of future leaders and also teaches the company what good marketing is and how it has the potential to change traditional views of product development. The program is viewed as a mutual learning experience—the graduates bring an external perspective and unique talent to GE and program participants learn from GE’s R&D expertise. As Comstock noted, “Marketing must bring a different viewpoint to tough problems. This involves data analytics that produce customer insights and the ability to address customer needs in a creative manner.” She went on to point out that “The best marketers are the ones who have both the creativity and analytical skills in the right proportion.”

Capability 2: Integrate Collaboratively Within GE

There are two key illustrations of this capability—the Commercial Council and the Imagination Breakthrough Process.
(more…)

Keywords: Beth Comstock, capabilities, GE, General Electric, innovation, leadershihp, marketing organization, The CMO Survey

Six Reasons Marketing Budgets are on the Rise

November 1st, 2012

Marketing budgets as a percent of overall firm budgets and as a percent of firm revenues are both on the rise as noted in my prior post. Why are firms spending more on marketing? Here are six reasons I see in The CMO Survey™ data and in my research.

New jobs: Marketing appears to be taking a leadership role in managing social media activities in companies. Given social media spending as a percent of marketing budgets is expected to rise from 7.6% to 18.8% over the next 5 years, this means new funds are flowing toward marketing.
New skills: Companies plan to increase marketing training by 3.7% in February 2012 to 7.2% in August 2012. In particular, I see many companies in investing in programs to build marketing capabilities. A good example is GE’s Experienced Commercial Leadership Program, which develops cohorts of young marketers for the company. Another example is Becton Dickinson’s Marketing Excellence Initiative, which provides non-marketers with a big dose of training in key marketing tools and processes.
New knowledge: Big Data has captured the imaginations of leaders in companies big and small. The ability to leverage information about customers in order to deliver and demonstrate value opens the door for marketers to fill the role as analysts and “data whisperers” as McKinsey calls them. As noted by McKinsey in its Chief Marketing and Sales Officer forum, “Data whisperers are those analysts who can coax meaning and insights from the increasingly sophisticated and massive data sets available today.” (more…)

Keywords: growth, marketing analytics, marketing budgets, social media, Spending, The CMO Survey

Marketing Spend on the Rise – Three Trends Worth Watching

October 19th, 2012

Results from The CMO Survey™ (August 2012) contain three indicators that marketing spend is on the rise in companies.

First and the weakest, CMOs reported that marketing spend is expected to grow by 6.4% in the next year. This number is positive, supporting my thesis, but the number is actually down from expected growth of 9.1% from August 2011. Given continued depressed firm growth and slow economic growth, this decrease is not altogether unexpected. It is positive nonetheless.

Second and more telling is the fact that marketing budgets as a percent of firm budgets increased 40% from 8.1% in February 2011 to 11.4% in August 2012. The Figure shows that this percentage has increased steadily over the last 18 months, pointing to the fact that companies are placing a greater emphasis on marketing spend relative to other types of strategic spend.

Figure. Marketing Budgets as a Percent of Firm Budgets

Third, marketing spending as a percent of firm revenues increased 30% from 8.5% in February 2012, the first time The CMO Survey™ asked the question, to 11% in August 2012.
(more…)

Keywords: budget, marketing, Spending, The CMO Survey

Innovation, Cash, and Courts: The New Reality of Tech Growth

October 1st, 2012

This post was co-authored with Matthew P. Manary, Ph.D. Candidate, Fuqua School of Business, Duke University.

In addition to studying product-market strategies for company growth, I have also been asking CMOs how they use a set of “firm boundary” strategies to grow. In response to the question to “Allocate 100 points to reflect how your firm will grow during the next 12 months,” The CMO Survey™ (August-2012) reports that the majority (68.9%) of growth is expected to be organic or from within the firm’s own boundary, 12.9% from partnerships (ranging from alliances to joint ventures), 12.2% from acquisitions, and 6.1% from licensing arrangements. Organic growth gives the firm more control because growth activities happen within the firm boundaries. It does not go to the “market” for goods or services and therefore does not have to manage a partnership or licensing agreement. It also does not extend the firm’s boundary (sometimes called a “hierarchy”) to include a new firm which gives more control, but is also more expensive and may dilute the firm’s focus. At the same time, organic growth is potentially more costly because the firm must learn to do things that potential partners or acquisition targets have already mastered.

Results show that organic, partnership, and licensing growth activities have not changed significantly in the last four years of The CMO Survey™, despite minor fluctuations. The use of acquisitions as a growth strategy, however, has steadily increased. Figure 1 shows this progression from 8.8% in February 2009 to 12.2% in August 2012. There may be many reasons for this—companies have cash on hand or can get low-cost loans to make acquisitions, acquisition targets are cheaper, or firms are engaging in riskier growth (new markets and new offerings). The latter appears to be true based on data from The CMO Survey™ as I noted in an earlier blog. (more…)

Keywords: Apple, Google, growth, innovation, IP, litigation, Microsoft, tech, The CMO Survey

A Fast Boat to China: How U.S. Companies Are Navigating the Marketing Waters

September 18th, 2012

The saying “a slow boat to China” means something that takes way too long to accomplish. More and more, however, that expression doesn’t match reality. The Chinese market is an increasingly attractive market for U.S. firms and the smart ones are moving there quickly.

Here is what I found in The CMO Survey (August-2012). In response to the question, “Which international market is your highest revenue growth,” 21.5% of CMOs responded with China. This is up from 16% reported just six months ago (The CMO Survey, February-2012). In response to the follow-up question, “Considering this international market, by what percent did your sales revenue increase in the last 12 months,” CMOs reported a whopping 51.5% increase! Here is a list of some of the strategies that seem to be paying off when selling to and in China.

Localize products (somewhat). In the fall, Häagen-Dazs sells ice cream moon cakes in order to celebrate the mid-Autumn Festival. Mid-Autumn Festival is an important day for the Chinese, marked by family reunions and gift-giving. Eating and gifting moon cakes is an important part of the tradition. Häagen-Dazs mooncakes can be eaten in shops or can be bought in gift boxes. The company also sells coupons, which many to companies give employees as gifts for the festival. Häagen-Dazs also offers an “ice cream hot pot” which is a special treat for small groups or parties. The hot pot is a big palette of different flavored ice creams and a pot of chocolate sauce. In another example, KFC derives almost a third of its total company revenues from China through its 2000 outlets across the country. KFC localizes by introducing dishes that match Chinese customers’ tastes. Two examples are the Beijing Chicken roll with sea food sauce (similar to Beijing duck, a traditional Chinese dish) and Spicy Diced Chicken (resembling a popular Sichuan-style dish). Both Häagen-Dazs and KFC are big global brands that bring status, quality, and exclusivity to Chinese consumers. At the same time, they have localized some of their offerings to fit Chinese consumers’ lifestyle, tastes, and preferences. The appropriate balance of standardization and localization should be thought through for each brand and its customers. A good example of a high level of localization is Home Depot. As reported in the Wall Street Journal last week, Home Depot learned that the slogan “You can do it, we can help” or more recently “You can do it” wasn’t selling among Chinese consumers who don’t embrace the do-it-yourself culture common among Americans. Instead, as noted by WSJ, Chinese consumers prefer “Do-It-for-Me” which means different products (that require less work from the customer) and additional services (that are sold with home improvement products).

(more…)

Keywords: Amway, Buick, China, Chivas, Coca-Cola, DuPont, General Mills, GM, growth, Häagen-Dazs, Hermès, International, International Flavors and Frangrances Inc, KFC, localize, marketing, Shang Xia, The CMO Survey, Wall Street Journal, Walmart

CMOs on the U.S. Economy: No Rebound in Sight

August 22nd, 2012

New results from The CMO Survey are in and they ain’t pretty. Two key findings reflecting top marketers’ views about the economy stand out. First, Chief Marketing Officers (CMOs) expressed doubt about the outlook for the U.S. economy. On a 100-point scale where 0 is least optimistic and 100 is most optimistic, ratings dropped from a post-recession high of 63.4 in February 2012 to a score of 58.4 in August 2012. Figure 1 shows this trajectory over time. The greatest pessimism lies among business-to-business companies which dropped from an overall optimism score in February 2012 of 60.2 to a low of 53.6 in August. Business-to-consumer companies also decreased, but only from 63.8 to 61.5.

Figure 1. CMO Optimism for U.S. Economy (0-100 with 0 being the least optimistic)

(more…)

Keywords: customer spending, economy, pessimism, The CMO Survey, uncertainty

Investing in Marketing Knowledge

February 21st, 2012

The CMO Survey tracks investments companies make in different kinds of marketing knowledge. In the August 2011 survey, companies reported the following average investments: marketing training (+3.1%), marketing consulting (+3.5%), integrating what we know about marketing (+6.0%), market research and intelligence (+6.2%), and developing knowledge about how to do marketing (+6.4%). (more…)

Keywords: learning, marketing investments, marketing knowledge, marketing spending, The CMO Survey

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