cmo study prez dma detroit - may 2012

© 2011 IBM Corporation2

The 2011 Global CMO Study is part of our C-suite Study series encompassing interviews with more than 15,000 C-suite executives

’04-’05 ’08-’09’06-’07 ’10-’11

CSCO

CEO

CFO

CHRO

CMO

CIO

IBM Institute for Business Value


In this largest sample of face-to-face CMO interviews, we spoke with more than 1,700 CMOs, 300 in North America

16%Communications

36%Distribution24%

Financial Services

21%Industrial

3%Public

44%Growth markets

17%North America

35%Europe4%

Japan

Sectors Regions

The study represents organizations in 64 countries and 19 industries

Growth Markets include Latin America, Central and Eastern Europe, Middle East and Africa and Asia Pacific (excluding Japan); n=1734


North America sample size n = 300, Rest of World n = 1333

65%Global CMOs

11%Regional CMOs

14%Country CMOs

10%BU CMOs

North America Rest of the World

33%Global CMOs

14%Regional CMOs

46%Country CMOs

8%BU CMOs


Sentiment analysis was performed on the 10,000 quotes

“None of the changes in Marketing today are evolutionary, they are all revolutionary and

transformational.”Insurance SVP of Marketing, USA

“Traditionally, corporate culture and character have been managed by HR, but it can't remain there in a digital environment. The world of separate internal and

external messages is gone, and internal actions, memos and decisions can impact your brand just as much as an advertising campaign.”

Financial Markets EVP, Head of Global Marketing, USA

“I think the biggest marketing challenge will be the analysis and diffusion of data. I firmly

believe CMOs and marketers need to become ‘analytic athletes’ to do their jobs.”

Maureen Schumacher, Southeast Regional Director, Google


§Globalization has brought the world to everyone’s backyard

§ Everyone is a broadcaster, publisher and a critic: there is nowhere to hide

§ Transparency is the new price of entry

CMOs: swimming, treading water or drowning?

In this Digital Era...

And...more data, more sources,

less clarity


“Being able to collect the right information, making sure the right people have access to it, can analyze it, and make recommendations based on insights – this is where marketing needs to lead, invest, engage.”

Engineering and machinery senior VP sales and marketing, France


§Globalization has brought the world to everyone’s backyard

§ Everyone is a broadcaster, publisher and a critic: there is nowhere to hide

§ Transparency is the new price of entry

§Do more than ever, inside and outside the organization

§ Be more accountable for return on investment (ROI)

§Use tools and technologies that their children understand better than they do

CMOs: swimming, treading water or drowning?

In this Digital Era... CMOs have to...

And...CMOs have just three to four years

to make their mark

And...more data, more sources,

less clarity


“Being able to collect the right information, making sure the right people have access to it, can analyze it, and make recommendations based on insights – this is where marketing needs to lead, invest, engage.”

Engineering and machinery senior VP sales and marketing, France


The vast majority of CMOs are underprepared to manage the impact of key changes in the marketing arena

50%

North America UnderpreparednessPercent of CMOs reporting underpreparedness

Data explosion

Social media

Growth of channel and device choices

Shifting consumer demographics

Financial constraints

Decreasing brand loyalty

Emerging market opportunities

ROI accountability

Customer collaboration and influence

Privacy considerations

Regulatory considerations

Global outsourcing

Corporate transparency

77%

69%

78%

71%

59%

67%

75%

67%

62%

57%

57%

51%67%

Delta withGlobal

+13

+10

+21

+11

+20

Source: Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? n=12 to 167 (n = number of respondents who selected the factor as important)



9

1312

2

4

3

1

7

We wanted to understand which underprepared areas are the most critical for CMOs


50

60

70

40

20 40 600

86

Financial constraints

Decreasing brand loyalty

Growth market opportunities

ROI accountability

Customer collaboration and influence

Privacy considerations

Global outsourcing

Regulatory considerations

Corporate transparency

5

6

7

8

9

10

11

12

13

Data explosion1

Social media2

Growth of channel and device choices3

Shifting consumer demographics4

Mean

Marketing Priority Matrix

Source: Q7 Which of the following market factors will have the most impact on your marketing organization over the next 3 to 5 years? n1=1733; Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? n2=149 to 1141 (n2 = number of respondents who selected the factor as important in Q7)

Factors impacting marketingPercent of CMOs selecting as “Top five factors”

UnderpreparednessPercent of CMOs reporting underpreparedness

5

1011

*


Academic & Press Reactions“It’s only the largest and most current of an increasing number of reports

and studies that show that marketing management, in too many major organizations, is sadly ill-prepared to deal with the increasingly complex

world in which they operate.”

Don E SchultzProfessor of integrated marketing communicationsNorthwestern University 12.30.11 marketing power

“Marketing must become more adept at managing the magnitudeof change now taking place. Otherwise, it will be like going into battle

with a Swiss Army knife.”

Financial Services Vice President, Marketing, USA

Your Opportunity


Globally, to deal with the broad level of underpreparedness, CMOs signaled three key domains of improvement


Deliver value to empowered customers

Foster lasting connections

Capture value, measure results


Deliver value to empowered customersIBM Institute for Business Value





North America CMOs are simultaneously investing in emerging and foundational capabilities; well beyond the global averages

PredictiveAnalytics

75%

66%

North America

Global

87%80%

87%82%

73%68%

75%72%

MobileApps

SocialMedia

CollaborationTools

TabletApps

67%

56%

ScorecardsDashboards

Plans to increase the use of technologyPercent of CMOs selecting technologies

Emerging Capabilities Foundational Capabilities

82%

73%

ContentMgmt.

77%70%

Singleview of

customer

87%81%

CustomerAnalytics

63% 61%

CampaignMgmt.

Source: Q22 Do you plan to decrease or increase the use of the following technologies over the next 3 to 5 years? n=259 to 264


9% 3% 11% 2%

*


…but face significant obstacles

Lack of IT integration with rest of company

Lack of marketing and IT alignment

After cost, the top barriers preventing technology adoption

“The biggest issue is prioritization and funding. IT funds most technology projects but if the technology is only marketing specific then it may need to be funded by Marketing.”

Insurance Marketing VP, CanadaSource: Q23 What are the top 5 barriers to using technology? n=268


10%BU CMOs

North America

14%CountryCMOs

11%Regional

CMOs65%

Global CMOs

35%41%

57%

GlobalCMOs

RegionalCMOs

BU CMOs

25%

34%

53%

Global CMOs RegionalCMOs

BU CMOs

1.6x 2.1x


Analyst Reaction

“CMOs, Make The Chief Business Technology Officer (née CIO) Your New Best Friend

This fall, Forrester's CMO practice partnered with the chief business technology officer, formerly known as the chief information officer (CIO), team to publish a report called "CMOs Must Merge Marketing With IT To

Win In The Digital Decade“…... The conclusion? Only companies with well-aligned marketing and IT departments will see success in what Forrester calls the age of the

customer.


How are you gearing your marketing people, programs and processes to understand individuals not just markets?

Begin with the big business question.§ Focus on the opportunity to create value

for customers as individuals.

Open the aperture.§ Reprioritize your investments to mine

digital channels, such as blogs, tweets, social networks, peer reviews and consumer-generated content, to access customers’ honest, unmediated views, values and expectations. Use advanced analytics to recognize preferences, trends and patterns across every touch point.

Safeguard data.§ Work with IT to assess potential data and

infrastructure exposures, employ tools to secure customer data and update privacy policies to address customers’ concerns.

Recommendations and tough questions – Deliver value to empowered customers


How do you safeguard your customers' data and privacy in a multi-channel, multi-device world?

Which tools and processes are you investing in to better understand and respond to what individual customers are saying and doing?


Foster lasting connectionsIBM Institute for Business Value





North America CMOs want to increase the use of social media as a key engagement channel…


North AmericaPriorities for managing the shift toward digital technologies

Source: Q12 What are your priorities for managing the shift toward emerging digital technologies? (Select top five.) n=300

Use social media as a key engagement channel

Design experiences for tablet/mobile apps

Enhance customer loyalty/advocacy

Monitor the brand via social media

Measure ROI of digital technologies

Use integrated software suites to manage customers

Develop social interaction governance/policies

Monetize social media

Analyze online/offline transaction analysis

Gain comprehensive visibility of supply chain

“Our customers value what others say about us more than what we say about ourselves. We can quantify this shift. It is real and happening today. This is why social media matters.”

Travel & Transportation CMO, USA

Global

57%

56%

67%

51%

56%

37%

29%

45%

24%

47%

*


….yet, many North America CMOs are still using data for transactions rather than for deepening relationships with their customers


Awareness/education

Interest/desire

Action/buy

Use/enjoy

Bond/advocate

Segmentation/targeting

North AmericaExtensive use of customer data

Percent of CMOs using data captured within customer lifecycle phases

Source: Q21 To what extent does your marketing organization capture, analyze and act on customer data generated during the following customer lifecycle phases? n=257 to 259

Transaction focused

Relationship focused

46%

45%

54%

41%

40%

61%

Global


Outperforming companies are more focused on capturing, analyzing and using data to understand and foster relationships


Segmentation/targeting

Awareness/education

Interest/desire

Action/buy

Use/enjoy

Bond/advocate

Source: Q21 To what extent does your marketing organization capture, analyze and act on customer data generated during the following customer lifecycle phases? n (outperforming) = 478 to 487; n (underperforming) = 366 to 371

Extensive use of customer dataPercent of CMOs using data captured within customer lifecycle phases

Outperforming organizations

Underperforming organizations

67%

56%

54%

58%

50%

51%

53%

36%

35%

49%

34%

31%

56%higher

26%higher

54%higher

47%higher

18%higher

65%higher


50%

North America CMOs have a strong desire to drive the required changes in order to activate their corporate character


North AmericaTop 5 initiatives driven by transparency

Percent of CMOs selecting initiatives

Source: Q9 To what extent does transparency create a need for you to: n=293 to 297

Enhance engagement withcustomers and citizens

Manage brand reputation withinand beyond the company

Expand data collection, analysisand insights capabilities

Strengthen collaborationacross the enterprise

Orchestrate a single viewof the brand

80%

78%

72%

72%

64%

Global

75%

74%

67%

64%

61%

Pink – out performing organizations, Blue - underperformers.


Supporting Press

Your Opportunity -Champion your organization’s corporate character

“Transparency is here. Wikileaks is a window to the future of business. Everyone will know about everything you do. Whether it’s your carbon footprint or your

fee structure, there will be no secrets. It’s best to out yourself and engage your community on how to improve your business…..”

From Customers Have the Power by John Winsor

Help the enterprise define and activate the traits that make it unique. Work across the different functions to meld the internal and external faces of the enterprise - for all touch points and experiences.


What steps are you taking to connect customer insights with product and service development, and stimulate your customers to become brand or company advocates?

How do your marketing tactics and investments work in sync to create andgrow a pervasive and innovative total customer relationship?

Jumpstart relationships.§ Capitalize on new digital channels to

stimulate conversations with existing and potential customers, and create new types of relationships to reveal untapped opportunities. Use tangible incentives to attract followers.

Connect continuously.§ Engage with your customers and citizens

at every stage in the customer lifecycle, and build online and offline communities to strengthen your brand.

Recommendations and tough questions – Foster lasting connectionsIBM Institute for Business Value


Capture value, measure resultsIBM Institute for Business Value





CMOs believe ROI on marketing spend will be the number one method for determining success by 2015


North America Seven most important measures to gauge marketing success

Percent of CMOs selecting success measurements

Source: Q19 What are the 5 most important measurements you (will) use to gauge marketing success by 2015? n=268

Customer experience

Overall sales

Marketing ROI

Marketing-influenced sales

Operating Profit

Conversion rate/new customers

Revenue per customer

Global

63%

58%

45%

48%

42%

Not in top 7

42%

“Ultimately, this is what we need to understand –customer and brand analytics: How will a $1 spend in marketing bring the most results?”

Neal Campbell, SVP & CMO CDW, USA

*


To truly deliver marketing ROI, CMOs need to have significant influence across all four Ps, not just promotion


North AmericaPercent of CMOs citing significant influence

Integrated advertising and promotion

Aligned internal and external communications

Innovative social and other emerging media

Source: Q14 How much influence do you and your organization have over the “Four Ps” and their related sub-factors? n=245 to 266

Promotion

Deeply researching customer needs

Product service portfolio

Comprehensive research and development cycle

Customer experience involving multiple touch points

Channel selection and management

End-to-end supply chain process

Full competitive pricing assessment

Understanding of total ownership costs/benefits

Integrated, cross-company pricing process

Products

Place

Price

Global

84%

82%

53%

48%

37%

46%

31%

47%

54%

47%

67%

73%


Leadership abilities

Cross-CxO collaboration

Competitive trends insights

Management capabilities

Understanding products/services value chain

Social media expertise

Finance skills

Demand creation capabilities

Analytics aptitude

Creative thinking

Voice of the customer insights

Technology Savviness

North AmericaCapabilities for personal success over next 3-5 years

Percent of CMOs selecting capabilities

Source: Q17 What capabilities do you need to be personally successful over the next 3 to 5 years? n=303

CMOs can also expand their personal influence by shifting to new capabilities that focus on technology, social media and ROI.


Global

65%

49%

45%

31%

30%

25%

16%

30%

45%

60%

63%

28%


Supporting Press

“Marketing is going through an identity crisis. Brand love and consumer intimacy are both still crucial. Yet today, quantitative

analysis, econometric modeling, real-time message monitoring and adaptation are all elements of the marketer’s tool set.”

From Mark de Swaan Arons Co-founder Effective BrandsMarketing Power Fall 2011

Your Opportunity

Expand your horizons by enhancing your personal financial, technical and digital savviness. Personally invest to broaden

your capabilities.


Capitalize on new tools to measure what matters.§ Use advanced analytics and

compelling metrics to improve decision making and to demonstrate your accountability.

Enhance business acumen.§ Adjust your talent mix to increase

technical and financial skills, and grow your digital expertise. Consider finding new partners to supplement your in-house resources.

Recommendations and tough questions – Capture value, measure results


What are you doing to enrich the skills mix in the marketing function and build technical, financial and digital acumen?

How are you measuring and analyzing the results of your initiatives and communicating them to advance your marketing function’s credibility and accountability?

“Success requires complete integration across all lines of business. The traditional approach is that all BUs look after their own priorities. But the marketplace is going through a quantum shift, and success will require harnessing our energy, resources and focusing on our goals.”

Insurance CMO, Canada


Closing Thoughts

§ Be ready for a career of perpetual learning and change – no matter your role in the marketing ecosystem

§ The time is now to invest in your own skills and capabilities

§ Pick one of the imperatives to explore for your business


To learn more about the IBM Global CMO Study

Download the IBMIBV app from the app store (Apple and Android)

Check out the Youtube videos of CMOs that participated in the study

http://bit.ly/YoutubeIBV

Take the online self assessment and see how you compare to the global sample

http://ibm.co/CompareToAssess

Join in on the conversation on LinkedIn http://bit.ly/JoinTalk

Watch the study launch webcasts and analyst discussion

http://ibm.co/SeeResearch


Their top 3 initiatives:

Source: Q13 What is the most important challenge you and your marketing organization face over the next 3 to 5 years? n=1564 Q18 What top 3 initiatives will your marketing organization drive to meet expanding responsibilities? Q18a n=1150, Q18b n=1546, Q18c n=1434 Q24 HOW will your marketing organization use technology over the next 3 to 5 years? n=1543

Their most important challenge:


The top 20 words CMOs used to describe…

Their use of technology: