Making The Perfect Marketer

Making the Perfect Marketer

by Paul Hyde, Edward Landry, and Andrew Tipping

A study from the Association of National Advertisers and Booz Allen Hamilton suggests five ways to make marketing more relevant than ever.

Illustration by Bob Goldstrom

It is no secret that marketing organizations are under pressure. Chief executive officers are "growing impatient with marketing," wrote distinguished Northwestern University professor Philip Kotler earlier this year. "They feel that they get accountability for their investments in finance, production, information technology, even purchasing, but don't know what their marketing spending is achieving."

His colleague, Don E. Schultz of Northwestern's Medill School of Journalism, is even more severe. "The marketing function is being pushed lower and lower in the corporate hierarchy," Professor Schultz wrote in 2003.

To investigate the truth behind these assertions, the Association of National Advertisers, the leading U.S. marketing trade organization, partnered with the global strategy and technology consulting firm Booz Allen Hamilton to discover whether marketing is in fact disconnected from companies' leadership agendas, to determine the causes of any dysfunction, and to uncover the best practices of superior marketing organizations.

After analyzing the results of an online survey of 370 marketing and nonmarketing executives at more than 100 companies in nine industries, which was supported by in-depth interviews with marketers across multiple industries, the research team arrived at a surprising conclusion: Contrary to the prevailing wisdom, the marketing function is more important now than ever before. But marketers, the men and women charged with running and operating the function in product and service industries, are having a hard time keeping up.

Specifically, the study -- the first part of an anticipated two-phase inquiry into structure, competencies, value, and accountability in contemporary marketing organizations -- identified three dichotomies hindering the effectiveness of marketing organizations:

1. More than 75 percent of marketers and nonmarketers say that marketing has become more important to their companies during the past five years. But at more than half of all companies, marketing and the CEO agenda are not aligned.

2. Higher expectations for marketing have driven nearly 70 percent of all companies to reorganize their marketing departments during the same period. But a major component of many such reorganizations, the position of chief marketing officer, remains ill-defined.

3. Measurable outcomes are now expected for marketing programs -- 66 percent of executives say true ROI analytics are marketing's greatest need. But most companies are still using surrogate metrics, such as awareness, instead of ROI measurements.

Fragmentation Follies

Today's marketing quandary stands in stark contrast to the 1950s and '60s, the era when the modern marketing organization was born, and when many of its current leaders grew up. For the most part, it was an "Ozzie and Harriet" world of intact nuclear families moving into new homes in expanding suburbs. Everybody read Life or the Saturday Evening Post, took an a.m. and p.m. newspaper, watched the Big Three television networks, gleefully greeted the latest fast-food restaurants, and washed clothes with the same brand-name detergents.

Around 1980, this cozy, centralized conformity began to shatter. The second oil embargo ushered in a severe recession -- and the recognition that economic growth had become punctuated and inconsistent. The birth of CNN heralded the rise of cable television and the continuing technologically induced fragmentation of media, markets, and consumer attention. The Iranian hostage crisis forced Americans -- and the rest of the world -- to confront globalization firsthand.

Today, all businesses are grappling with the problems posed by continual, discontinuous change. Globalization, the Internet, and rising information transparency have led to an increasingly mobile work force, fickle customers, and disruptive technologies and business models, which make firms less able to predict, let alone control, the near-term shape of their markets.

Few functional areas have been hit as hard as marketing. Across sectors, customers are able to demand and receive progressively more customized goods and services. Meeting such demands, in turn, has boosted companies' complexity and cost of doing business, and put pressure on marketers, in particular, to understand customer needs, seek real profits from each segment, and measure outcomes. In the face of growing customer choice and market transparency, the shift in marketing's emphases has been profound:

Ð'* In the era of mass marketing, the primary source of value for most companies was their products or brands; today, value is moving to the customer interface.

Ð'* Marketing's focus, formerly on advertising-based brand development, has shifted to "below the line" operations capable of driving short-term, measurable financial returns.

Ð'* Companies' sales efforts, once characterized as "one size fits all," are transforming to meet customer demands for unique solutions and value-added services.

Marketers have been forced to evolve from a world where, as Henry Ford once put it, "You can have it in any color so long as it is black" to one in which customers routinely demand, "I want it in this color, in this configuration, at this price, and if you can't deliver tomorrow, I'll source it over the Web from any dealer who can within a 600-mile radius."

Marketing's Importance

These trends are widely perceived to have wreaked havoc on the marketing organization. As companies have met their growth challenges by consolidating and globalizing, power appears to have shifted away from marketing and toward more regimented (and readily understood) functions. "In financial institutions, marketing usually takes a back seat to hard and deep disciplines such as finance or operations," ABA Bank Marketing has noted. "It's not uncommon to find the head of marketing reporting to the CFO or COO."

But our survey found the conventional wisdom about marketing's decline to be inaccurate. Indeed, our first finding was that marketing is increasingly important to corporate success. Across all industries, nearly four out