News & Announcements

November 7, 2007, Waltham, MA

A preview of a forthcoming Journal of Marketing piece by Pravin Nath, a professor of marketing at the LeBow College of Business at Drexel University, and Vijay Mahajan, a professor in the department of marketing at the University of Texas at Austin, has the marketing world all a twitter. If they haven't already chewed their nails down to the nub after the annual Spencer Stuart study put their average length of stay in American firms at 26.8 months, chief marketing officers (CMOs) are doing it now. They needn't. True, headlines in the industry press such as, "CMOs Rapped for Having Zero Impact on Sales: Study Shows Difficulty in Measuring Short-term Value of C-Suite Position," as appeared in Advertising Age, suggest CMOs might want to "hide this publication," yet a closer look at the limitations of the study show pronouncements like these are unduly alarmist.

In the article set for publication in the January 2008 edition of the journal, Nath and Mahajan set out to address the dearth of research into why some firms have CMOs, or similarly titled chief marketer, on the senior most management team, while others do not. A recent study by Booz Allen Hamilton estimates that just 50 percent of Fortune 1000 firms have a CMO, compared to 80 percent of Fortune 500 firms who have CFOs. The thrust of their research was to identify the reasons why a company might invite a marketing person to the senior management table in the first place.

As they set out to do, Professors Nath and Mahajan shed light onto some of the strategic, structural, and environmental reasons a firm may opt to have a CMO on the management team. "Firms are more likely to have a CMO in the TMT [top management team] when they have relatively high levels of innovation and differentiation, when they follow a corporate branding strategy, when the CEO is an outsider, and when TMT's marketing experience is relatively high," they conclude. Interestingly, of the 167 companies that met the study's criteria, only 25% had a CMO all five years the professors studied. We should note that we can't tell from the research whether it was the same person in the CMO position all five years or just a person. Regardless, in any given year, just 40% of the firms in the study had a CMO.

What has CMOs shaking in their boots is the outcome of their secondary research goal. As marketing academics who—like many of their colleagues—express concern about marketing's shrinking sphere of influence within companies and general corporate confusion about the role (we might say, importance) of marketing, Nath and Mahajan also hoped to demonstrate that having a CMO on the management team had a positive impact on corporate performance. Yet the data didn't make that case. Instead, they concluded, "CMO presence has no impact on firm performance and firms with a CMO do not perform better or worse than those without one."

We should point out here that Nath and Mahajan note in their article, "our conceptual framework for explaining CMO presence does not [our emphasis] offer any guidance regarding the main effect of the presence or absence of a CMO on firm performance." They go on to reiterate that they, "do not offer a hypothesis for the main effect of CMO presence on performance." In other words, the study cannot say specifically what having a CMO at the management table does for a firm, which actually could be quite good; nor can it say what happens if a firm doesn't have one, which could, in fact, be quite detrimental. All the study says is the act of hiring a CMO and putting him or her on the management team doesn't appear to directly help or hinder sales and profits. Are we the only ones who feel like slapping our foreheads and saying, "duh!"

The study's authors openly admit that they looked at CMO "presence" on the senior management team, not "level of influence" on the team or "ability to deliver" greater innovation, true differentiation, better corporate branding strategy—all the reasons the study found why firms hire CMOs in the first place. Really, just because you have new running shoes doesn't mean you're going to win the marathon, does it? If the intention was to make a case for having a CMO, looking at whether a CMO had an impact on the performance of marketing programs—something in their direct purview—and whether the performance of marketing programs had any impact on overall financial performance or not—and, yes, this is possible—might have been a better place to start.

Our main beef with the article and its accompanying research, however, is that its authors Nath and Mahajan only looked at the presence of a CMO and its relationship to performance with no basis of comparison to other C-suite positions. We don't feel we're going too far out on a limb to say that the mere presence of a CFO, CIO, COO, or even a CEO for that matter may not have any relationship, be it positive or negative, to financial performance either. Think of all the companies that are doing well out there and all the ones in the toilet. Are they doing well or poorly because they have a CEO, CFO, CIO, and/or COO, or because of who has those jobs? Wouldn't it be something if it turned out that one or more of these other C-suite positions actually appeared to have a negative impact on performance? Having a CMO might actually be the lesser of many potential evils because it neither helps NOR hinders. We can only imagine what the headlines would be then.

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