CMOs Need More Business Acumen

A recent assessment of SEC filings of Fortune 1000 companies conducted by Ernst & Young suggests that the CMO post remains low on the priority list at many organizations and that CMO's authority remains limited.

The study found that 13% to 15% of Fortune 1,000 companies employ some sort of marketing position with a chief or senior-executive-level title, and only 70, or 7% of those firms, list the head marketer in financial filings. Being listed in those public filings means an individual is among the highest compensated executives at the company and sits on the operating board.

The absence of a head marketer in public filings is evidence of their potential lack of say within organizations, said Ed See, a consultant in E&Y's advisory services practice and former president of Marketing Management Analytics. Mr. See went on to say "within a corporation, you are either part of the core decision-making process or you're submitting your budget to be approved. If you're not listed as one of the top executives, chances are you're submitting your budget."

The type of company publicly listing a head marketer as a top executive varied wildly. Classic CPG companies such as Procter & Gamble, Coca-Cola and Del Monte Foods list the title, but consumer-finance companies such as American Express, restaurants such as Burger King and retailers including Target and Sears Holdings also indicate marketers are among the top-compensated executives.

Of the 70 marketers that are publicly listed as top executives, about half have a background in marketing, communications or advertising, while the other half have a background that includes product development, brand management or other operational roles - a sign that financial acumen is, indeed, becoming a necessity for CMOs seeking influence within organizations. “What's being asked of CMOs today is to add a set of financial skills that are skills that have not traditionally been there."

The recession is hastening that shift. As companies slash marketing budgets and monitor every dollar going out the door, marketers are being asked to make an even stronger case for advertising and its returns. In this type of environment, Mr. See said, the four Ps of marketing are being balanced against the three Ps of finance and operation: payroll, production and profit.