CMO study prez dma detroit - may 2012

IBM Institute for Business Value

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 06- 07 08- 09 10- 11

CEO

CIO

CFO

CHRO

CSCO

CMO

2 © 2011 IBM Corporation


In this largest sample of face-to-face CMO interviews, we spoke with
more than 1,700 CMOs, 300 in North America
The study represents organizations in
64 countries and 19 industries
Sectors 3% Regions
Public
16% 17%
Communications North America
21%
Industrial
44%
Growth markets

36%
24% Distribution 35%
Financial Services Europe
4%
Japan

10%
North America Rest of the World
BU CMOs 8%
BU CMOs

14% 33%
Country CMOs Global CMOs
46%
11% Country CMOs
Regional CMOs
65%
Global CMOs 14%
Regional CMOs

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

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

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

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


CMOs: swimming, treading water or drowning?

In this Digital Era...

§ 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

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



CMOs: swimming, treading water or drowning?

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

§ Globalization has brought the world to § Do more than ever, inside and outside
everyone s backyard the organization
§ Everyone is a broadcaster, publisher and § Be more accountable for return on
a critic: there is nowhere to hide investment (ROI)
§ Transparency is the new price of entry § Use tools and technologies that their
children understand better than they do

And... And...
more data, more sources, CMOs have just three to four years
less clarity to make their mark

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
North America Underpreparedness
Percent of CMOs reporting underpreparedness Delta with
Global
50%
Data explosion 77%
Social media 69%
Growth of channel and device choices 78% +13
Shifting consumer demographics 71%
Financial constraints 59%
Decreasing brand loyalty 67% +10
Emerging market opportunities 75% +21
ROI accountability 67% +11
Customer collaboration and influence 62%
Privacy considerations 57%
Global outsourcing 57%
Regulatory considerations 51%
Corporate transparency 67% +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)
© 2011 IBM Corporation


We wanted to understand which underprepared areas are the most
critical for CMOs
*
Marketing Priority Matrix 1 Data explosion
Underpreparedness
Percent of CMOs reporting 2 Social media
underpreparedness
1 3 Growth of channel and device choices
70
2 4 Shifting consumer demographics
3
5 Financial constraints
4 6 Decreasing brand loyalty
60
5 7 Growth market opportunities
6
10 7 8 ROI accountability
8 9
11
9 Customer collaboration and influence
50 12 10 Privacy considerations
13
11 Global outsourcing
Factors impacting
marketing 12 Regulatory considerations
40 Percent of CMOs selecting
as Top five factors 13 Corporate transparency
0 20 40 60 Mean

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?
8 n2=149 to 1141 (n2 = number of respondents who selected the factor as important in Q7) © 2011 IBM Corporation

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 Schultz
Professor of integrated marketing communications
Northwestern University 12.30.11 marketing power

Your Opportunity

Marketing must become more adept at managing the magnitude
of change now taking place. Otherwise, it will be like going into battle
with a Swiss Army knife.
Financial Services Vice President, Marketing, USA



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

Deliver value to
empowered Capture value,
customers measure results

Foster lasting
connections



Deliver value to empowered customers

Deliver value to

Foster lasting
connections



North America CMOs are simultaneously investing in emerging and
foundational capabilities; well beyond the global averages
*
Plans to increase the use of technology North America
Percent of CMOs selecting technologies Global

Emerging Capabilities Foundational Capabilities
9% 3% 11% 2%
87% 87% 87%
80% 82% 82% 81%
75% 75% 77%
73% 72% 73%
68% 67% 70%
66%
63%
61%
56%

Single
Predictive Mobile Social Collaboration Tablet Scorecards Content Customer Campaign
view of
Analytics Apps Media Tools Apps Dashboards Mgmt. Analytics Mgmt.
customer
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


but face significant obstacles

After cost, the top barriers preventing technology adoption

North America Lack of marketing and IT Lack of IT integration with
alignment rest of company
10%
BU CMOs
1.6x 2.1x
14% 57%
53%
Country
CMOs
41%
11% 35% 34%
Regional
25%
CMOs
65%
Global CMOs

Global Regional BU CMOs Global CMOs Regional BU CMOs
CMOs CMOs CMOs

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

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.



Recommendations and tough questions Deliver value to
empowered customers

Begin with the big business question. How are you gearing your marketing
§ Focus on the opportunity to create value people, programs and processes to
for customers as individuals. understand individuals not just markets?

Open the aperture.
§ Reprioritize your investments to mine
digital channels, such as blogs, tweets,
social networks, peer reviews and Which tools and processes are you
consumer-generated content, to access investing in to better understand and
customers honest, unmediated views, respond to what individual customers
values and expectations. Use advanced are saying and doing?
analytics to recognize preferences, trends
and patterns across every touch point.

Safeguard data.
§ Work with IT to assess potential data and How do you safeguard your customers'
infrastructure exposures, employ tools to data and privacy in a multi-channel,
secure customer data and update privacy multi-device world?
policies to address customers concerns.



Foster lasting connections

Deliver value to

Foster lasting
connections



North America CMOs want to increase the use of social media as a
key engagement channel
North America
*
Global
Priorities for managing the shift toward digital technologies
Enhance customer loyalty/advocacy 67%
Design experiences for tablet/mobile apps 57%
Use social media as a key engagement channel 56%
Use integrated software suites to manage customers 56%
Monitor the brand via social media 51%
Measure ROI of digital technologies 47%
Analyze online/offline transaction analysis 45%
Develop social interaction governance/policies 37%
Monetize social media 29%

Gain comprehensive visibility of supply chain 24%

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

17 Source: Q12 What are your priorities for managing the shift toward emerging digital technologies? (Select top five.) n=300 © 2011 IBM Corporation


.yet, many North America CMOs are still using data for
transactions rather than for deepening relationships with their
customers
North America Global
Extensive use of customer data
Percent of CMOs using data captured within customer lifecycle phases

Segmentation/targeting 61%

Awareness/education 46%

Interest/desire 45%

Action/buy 54%

Use/enjoy 41%
Transaction focused
Bond/advocate
Relationship focused 40%

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


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

Extensive use of customer data
Percent of CMOs using data captured within customer lifecycle phases
67%
Segmentation/targeting 26%
53% higher

56%
Awareness/education 56%
36% higher

54%
Interest/desire 54%
35% higher

58%
Action/buy 18%
49% higher

50%
Use/enjoy 47%
34% higher

51%
Bond/advocate 65% Outperforming organizations
31% higher Underperforming organizations

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
© 2011 IBM Corporation


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

Top 5 initiatives driven by transparency
Percent of CMOs selecting initiatives

50%
Enhance engagement with
customers and citizens 80% 75%

Manage brand reputation within
and beyond the company 78% 74%

Expand data collection, analysis
and insights capabilities 72% 67%

Strengthen collaboration
across the enterprise 72% 64%

Orchestrate a single view
of the brand 64% 61%

Pink out performing organizations, Blue - underperformers.
Source: Q9 To what extent does transparency create a need for you to: n=293 to 297

Supporting Press

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

Your Opportunity -
Champion your organization s corporate character

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.



Recommendations and tough questions Foster lasting connections

Jumpstart relationships.
§ Capitalize on new digital channels to
How do your marketing tactics and
stimulate conversations with existing and
investments work in sync to create and
potential customers, and create new
grow a pervasive and innovative total
types of relationships to reveal untapped
customer relationship?
opportunities. Use tangible incentives to
attract followers.

Connect continuously. What steps are you taking to connect
§ Engage with your customers and citizens customer insights with product and
at every stage in the customer lifecycle, service development, and stimulate
and build online and offline communities your customers to become brand or
to strengthen your brand. company advocates?



Capture value, measure results

Deliver value to

Foster lasting
connections



CMOs believe ROI on marketing spend will be the number one
method for determining success by 2015
*
Seven most important measures to gauge marketing success
Percent of CMOs selecting success measurements

Marketing ROI 63%

Customer experience 58%

Overall sales 45%

Conversion rate/new customers 48%

Marketing-influenced sales 42%

Operating Profit Not in top 7

Revenue per customer 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

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



To truly deliver marketing ROI, CMOs need to have significant
influence across all four Ps, not just promotion
North America
Percent of CMOs citing significant influence Global

Integrated advertising and promotion 84%

Promotion Aligned internal and external communications 82%
Innovative social and other emerging media 73%

Deeply researching customer needs 67%
Products Product service portfolio 53%
Comprehensive research and development cycle 47%

Customer experience involving multiple touch points 54%

Place Channel selection and management 47%
End-to-end supply chain process 31%

Full competitive pricing assessment 48%
Price Understanding of total ownership costs/benefits 46%
Integrated, cross-company pricing process 37%

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



CMOs can also expand their personal influence by shifting to new
capabilities that focus on technology, social media and ROI.
Capabilities for personal success over next 3-5 years
Percent of CMOs selecting capabilities
Leadership abilities 65%
Voice of the customer insights
63%
Creative thinking 60%
Cross-CxO collaboration 49%
Competitive trends insights 45%
Analytics aptitude 45%
Management capabilities 31%
Demand creation capabilities 30%
Understanding products/services value chain 30%
Technology Savviness 28%
Social media expertise 25%
Finance skills 16%

26 Source: Q17 What capabilities do you need to be personally successful over the next 3 to 5 years? n=303 © 2011 IBM Corporation

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 Brands
Marketing Power Fall 2011

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



Recommendations and tough questions Capture value,
measure results

Capitalize on new tools to measure How are you measuring and
what matters. analyzing the results of your
§ Use advanced analytics and initiatives and communicating them
compelling metrics to improve to advance your marketing
decision making and to demonstrate function s credibility and
your accountability. accountability?

Enhance business acumen.
§ Adjust your talent mix to increase What are you doing to enrich the
technical and financial skills, and grow skills mix in the marketing function
your digital expertise. Consider finding and build technical, financial and
new partners to supplement your in- digital acumen?
house resources.

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.
28 Insurance © 2011 IBM Corporation
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 http://bit.ly/YoutubeIBV
that participated in the study

Take the online self assessment and http://ibm.co/CompareToAssess
see how you compare to the global
sample

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

Watch the study launch webcasts and http://ibm.co/SeeResearch
analyst discussion



The top 20 words CMOs used to describe
Their most important challenge:

Their top 3 initiatives:

Their use of technology:

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

CMO study prez dma detroit - may 2012

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