How brands can truly ensure their CEO, CFO and CMO work together

Opinion

Every part of a business must ensure marketing maximises its contribution to top- and bottom-line growth as well as the share price.

Last month, McKinsey & Company partner Kathryn Rathje highlighted how chief marketing officers (CMOs) can work more effectively with CEOs and chief financial officers (CFOs) to drive business value.

I agreed with much of the commentary, but my view is that the relationship in the C-suite when it comes to marketing needs to be a more holistic and rounded partnership, with both sides learning from the other.

Is marketing’s role defined?

McKinsey’s own recent study, The CMO’s Comeback: Aligning the C-suite to Drive Customer-Centric Growth, made it clear how much this is needed. It presented a mixed picture of how the CMO’s relationship with the rest of the C-suite is developing.

While there has been a rise in the number of CEOs who say they feel comfortable with modern marketing to 64%, there has been a drop — from 90% to 70% — in CEOs who say that marketing has a clearly defined role within the organisation and one that is understood by the organisation.

One quote struck me in the report from the CEO of a global gaming company and it is one that gets to the heart of the problem: “Once we as a C-suite — including the CMO — agree on company goals, strategies and business metrics we’re trying to achieve, I expect the CMO to tie marketing metrics and connect marketing activities to that big picture.

“I don’t want to hear about brand awareness if that’s not what we agreed upon as a company goal.”

CMOs can often not see the bigger picture — as CEOs and CFOs do — and instead focus too much on the details. That is understandable, given the increasing complexity of advertising, but CMOs should focus on what should be their core aim: increasing their companies’ financial and strategic health.

Building trust across the C-suite

To help tackle this disconnect, I am launching a course, “Talking the Language of the CMO”, which will help to explain to CEOs and CFOs why marketing is so important to the top and bottom lines — and share prices.

The course complements the existing “How to Speak the Language of the CFO” course. The aim of these courses is to have all parts of the C-suite get the most of their marketing budgets.

I teach marketing teams how to better understand the business priorities of their organisations and tie in directly how marketing contributes to profit and revenue growth.

This is fundamental to building trust and it is clear from McKinsey’s study that much needs to be done. It found that 70% of CEOs interviewed said that they measure marketing’s impact based on year-on-year revenue growth and margin, but only 35% of CMO respondents track this as a top metric.

Marketing’s central role is growing

However, there are two areas I would challenge the report’s assumptions. The first is the assumption that CEOs and CFOs are becoming less certain of marketing’s role. I would argue the opposite.

The Q1 results season provided plenty of evidence that companies increasingly see the central role of marketing in delivering financial and strategic goals, as highlighted by the 2022-2024 inflation crisis.

One only has to look at the comments from the likes of Procter & Gamble, Unilever and Nestlé, among others, to see that many businesses now see cutting marketing spend as a false economy.

The second is the inference that the relationship between the CMO and the rest of the C-suite should be a one-way street. That is only half of the story.

Given the increasing importance of marketing to businesses, CEOs and CFOs also need to be more aware of how marketing can help support their goals, hence why I feel it is not just CMOs who need to learn about business.

CEOs and CFOs need to understand the dynamics — if not the absolute details — of how marketing helps their companies grow.

Marketing as investment

The direction of travel looks clear: marketing is increasingly seen as an investment, not a cost.

However, much remains to be done. It is vital for all parts of the modern-day corporation to work together to ensure that the marketing function maximises its contribution to not only top- and bottom-line growth but also — for listed companies — their share prices.

Businesses that get marketing right will be the ones that will succeed in the increasingly volatile world in which corporations operate. For this to happen, all need to play their part.

As usual, this is not investment advice.

Ian Whittaker is an investment analyst