Chief marketing officers (CMOs) now oversee or heavily influence customer experience, technology spending and P&L performance as means to deliver growth, according to the Gartner CMO Spend Survey 2016-2017. The spending priorities reported in this year’s survey show how marketing organizations continue to lead the charge in a data-driven, digitally led world.
“Over the past several years, we’ve witnessed an expansion of the CMO mandate, from what was largely a promotional role to what is now often seen as the growth engine for the business,” said Gartner for Marketers research vice president Jake Sorofman.
CMOs see increased responsibility
In over 30% of organizations, at least some aspects of sales, IT and customer experience report to the CMO. Extending a trend from the 2015-2016 survey, digital commerce continues to be an important driver of growth, with 62% of companies reporting that digital commerce rolls up to CMO. Forty-four percent of sales teams report to the CMO (though, in most cases, this is likely fractional responsibility, not a wholesale shift in reporting lines).
Action:Because more functions now report into the CMO, work with cross-functional leadership — particularly in sales, support, IT and customer experience— to harmonize roles and responsibilities. Focus on the priorities of the business and customer needs, not conventional views of who ought to own which functions.
CMO marketing technology spend rivaling CIO technology spend
Marketers are now extraordinarily dependent on technology. This is reflected in the increased marketing budget allocated to technology. The survey data suggests marketing leaders allocate 27% of their expense budget to technology, equal to 3.24% of overall revenue, compared with CIO technology spend of 3.4% of revenue.
This narrow gap between CMO and CIO technology spending will close over the next year based on substantially different annual growth rates (12% annual for marketing versus 3.1% for IT in 2016). This trend supports the Gartner prediction that CMOs will spend more on technology than CIOs by 2017.
Action: Assess your technology spending levels and be sure to review benchmarks relative to your company’s size, value chain and vertical industry. Connect your chief marketing technologist or equivalent with the CIO or equivalent to align spending efforts and share best practices.
CMOs who take on P&L responsibility command larger budgets
Seventy-five percent of marketing leaders said they own or share responsibility for P&L, up from 73% last year. Marketers with P&L responsibility have 20% higher budgets on average than those without a share of P&L ownership. This P&L responsibility becomes a virtuous cycle: marketing leaders who demonstrate accountability through stewardship of the P&L earn the trust of senior management and command larger budgets. Marketing leaders who have P&L responsibility say their marketing budget, on average, is 12% of revenue, compared with 10% for those with no plans for P&L responsibility.
Action: If you have P&L responsibility, revisit your attribution metrics to ensure you can give credit to activities that deliver business results. If you don’t own the P&L, determine whether you have capabilities to accurately report expenses and revenue.
Conflicting customer experience reporting lines
Of the companies that have a chief customer officer (CCO), only one in 10 reports to the CMO. The CCO typically reports to the CEO or COO. Yet marketing plays an important, and often leading, role in designing and executing the customer experience. Tension is never far away when accountability flows in one direction and authority in another.
A little tension may be good for the company and customer because it’s important to ensure an empowered counterbalance between a marketer’s tendency to prioritize short-term results and the longer-term strategic goal of retaining and growing the most profitable customer relationships.
Action:Build a close working relationship with the CCO or equivalent to ensure alignment to a shared set of priorities, goals and view of the customer.
Gartner for Marketers clients can read more in CMO Spend Survey 2016-2017: Budgets Climb (Again!) to 12% of Revenue as Marketers Juggle More Demands by Jake Sorofman.
CMO Spend Survey
Learn how and where companies are spending marketing dollars in the Gartner 2016-2017 CMO Spend Survey.
Gartner Digital Marketing Conference
Hear more about digital marketing trends at the Gartner Digital Marketing Conference 2017, May 10-12, in San Diego, CA. Follow news and updates from the event on Twitter using #GartnerDMC.