What does an effective CMO look like?

The CMO role is plagued by a notoriously short lifespan; according to a study by Spencer Stuart, CMOs at Top 100 American advertisers remain in their positions for an average of just 43 months.

The purpose and remit of the CMO role at mobile-first companies has always been a complex maze of competing motivations. Direct response advertising dominates mobile, but the reach of mobile, the ease with which consumers can install mobile products and become users, and the breadth of the freemium model intersect to create a phenomenon wherein the most successful mobile-first products own brands that benefit from a vast amount of organic discovery. If successful mobile-first products experience appreciable growth as a result of the gravitational pull of their brands, a reasonable person could assume that brand building is what propelled those products to success.

Arriving at this conclusion generally requires an analysis that only considers 1) products that are already successful and 2) products that launched in a distinctly less competitive mobile ecosystem. The way a successful company markets its products now doesn’t actually provide much insight into how that company became successful. Spotify’s current marketing strategy might be appropriate for a publicly-listed behemoth with 3500 employees and billions of dollars in yearly revenue, but it almost certainly isn’t appropriate for a streaming start-up.

I have always maintained that “brand marketing” is not the opposite of “performance marketing” because all marketing should be performance focused: a marketer’s job is to drive revenue. In Ogilvy on Advertising (published 1983), David Ogilvy writes:

When I write an advertisement, I don’t want you to tell me that you find it ‘creative.’ I want you to find it so interesting that you buy the product.

The purpose of an advertisement is to instigate the adoption of a product. If that is best done for a product by establishing brand resonance, then so be it, although I generally believe that brand equity offers little benefit to mobile-first products, for which network effects are really the ultimate growth asset. Regardless, all marketing should be engineered to culminate in some response that results in revenue generation. If that’s not the outcome that is being designed for in marketing, what’s being done isn’t marketing.

It’s fairly common for commentators to mistake non-direct response marketing campaigns as brand marketing: television commercials, radio, influencer campaigns, etc. When I see these campaigns run from large, sophisticated mobile-first advertisers, they are usually undertaken with a strict sense of performance and measured via models that probabilistically attribute revenue on the basis of incrementality. I make the point in Brand marketing and performance marketing can co-exist on mobile that running campaigns on non-direct response channels can make economic sense for an advertiser if 1) the advertiser has saturated direct response channels and 2) the mixed channel composition ultimately results in a lower blended cost of acquisition. But achieving this requires measurement, and no matter how diverse a marketing team’s channel mix, measurement is at the very heart of marketing for mobile-first companies.

The consulting company Bain, in considering why average CMO tenures are significantly shorter than those of other key executive roles, identified three CMO prototypes: the Creative Iconoclast, the Professional GM, and the Digital Wizard. Ultimately the piece concludes that the right marketing leader at any given organization is some mix of all three of these prototypes, with the mix depending on the type of product being marketed.

This conclusion is probably broadly correct, but it neglects to acknowledge something: none of these three archetypal marketers can be effective without measurement in place. No matter the delivery mechanism — be it a Facebook ad or a billboard — the process of marketing a product comprises four steps: 1) targeting a potential customer, 2) delivering a message to them, 3) observing whether or not they take an action, and 4) absorbing that new information into a model. The relative emphasis that the CMO is disposed to placed on creative, or on organizational management, or on data infrastructure is irrelevant until they have a clear sense of how any marketing spend develops into revenue.

Measurement is the catalyst behind the process — it is why marketing is a continued cycle and not something that a company does just once. So measurement is really the foundation on which a marketing strategy and a marketing team is built, and it means that measurement is the core component of the marketing function that the CMO must own.

When I say measurement here, I don’t mean the lines of code that attribute installs or revenue to a specific campaign. “Measurement” in this context means the fundamental growth strategy: the optimization metrics, the budget allocation, the attribution strategies, the media mix models, etc. The CMO should own these things; if the marketing team is the locomotive of the company, then the CMO is the engineer.

The reason measurement ownership is such an indispensable part of the CMO role is that is allows the marketing team to be completely agnostic with respect to channel mix: if measurement undergirds the marketing team’s operation, then the team is performance oriented by design and any channel can be utilized within a performance framework. The most important characteristic of a mobile-first CMO is a total absence of channel-centric or format-centric ideology: the CMO should be equipped and willing to utilize any channel.

Of course, certain channels are more or less appropriate at different stages of the company. Direct response marketing tends to outperform other forms of marketing in the “acquisition” phase of a product’s marketing lifecycle, when potential customers are being exposed to the product for the first time. As direct response channels saturate or the total addressable market for the product has been reached, a marketing team might expand its mix to non-direct response campaigns as its primary goal shifts from acquiring new users to re-engaging lapsed users or activating existing users.

The idea here is that the company’s marketing organization is fluid and changes over time as the company’s needs change. Dogmatism with respect to channel supremacy or approach can be a fatal ailment for marketers as a result: the marketing strategy needs to adapt to the product and the user base, not the other way around. If a CMO’s work is anchored to a measurement-first philosophy, the channel mix is almost incidental, and changing it over time is painless.

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