Executive Summary
In recent years, best practices that successfully guided consumer marketers for decades appeared to be losing effectiveness. With audience resistance to advertising growing, and ad costs perceived as increasingly burdensome, conventional means of organizing marketing departments came - and continue to come - under question.
According to a past ANA study, which helped to quantify the extent of this phenomenon, 70% of the marketing organizations surveyed had been reorganized in the preceding three years. The purpose of this study, conducted by the Association of National Advertisers and BtoB Magazine, is to further explore this trend. Reorganizations have clearly been widespread, but have the goals that fueled the reorganizations been met?
In February/March 2008, the Association of National Advertisers (ANA), BtoB Magazine, and Guideline Inc. conducted an online survey of business-to-business and business-to-consumer marketers. The survey explored the extent to which the role of marketing has undergone changes, the impact of those changes, and how instrumental marketing reorganization was in driving those changes. Specifically, we set out to uncover what impact a reorganization might have on marketing's responsibilities.
In two past surveys, more than two-thirds of the marketing organizations polled stated that they had undergone a restructuring in the past three years. The primary reason for this change is a misalignment between management and the marketing team: Management expected marketing to be strategic, while marketers tended to be tactical, focusing more on changing brand elements than driving new business revenue streams. Thus this survey was conducted to delve into why and how the role of marketing is changing.
Interestingly, there has been a significant role shift. Substantially more (nearly 50%) marketers today focus on strategic innovation and new business development, where previously less than a quarter were primarily responsible for this function. Marketers also reported they are now more aligned with management, and in 50% of the cases, marketing is the primary driver of their company's strategic decision making.
Online interviews were conducted among a total of 383 respondents drawn from the ANA membership and from BtoB Magazine subscribers. Of this figure, 167 represented firms primarily engaged in B-to-B marketing, 86 represented firms primarily engaged in B-to-C marketing, and 130 were "combo" firms engaged almost equally in both segments.
While the primary role of marketing is still marketing communications, it is shifting. Interestingly, B-to-C marketers are more likely to fill that role than B-to-B marketers, just the opposite of what most would have imagined. Seventy-three percent of B-to-C marketers reported marketing communications as their primary role versus 62% of B-to-B respondents. A reorganization is the impetus for driving these changes.
However over the past three years, while the primary role remains marketing communications for both segments (B-to-C 49%, B-to-B 47%), fully 35% of B-to-C marketers and 47% B-to-B marketers, respectively, report that they are primarily responsible for strategy and innovation. Additionally, being primarily responsibility for strategy/innovation is more common among B-to-C marketers. Prior to reorganizing, only 13% indicated strategy/innovation as marketing's primary role; after reorganizing, this figure increased to 35%. For B-to-B marketers, the figure rose just 10 percentage points: 14 to 24%.
In contrast, the growth in responsibility for directing new business development was more pronounced among B-to-Bs. The number reporting new business development as marketing's primary responsibility rose from 10 to 23%, while the comparable figure for B-to-Cs rose just 5 percentage points, from 0 to 5%.
How Involved is Marketing in the Strategic Direction?
B-to-C marketers are more likely to be responsible for making major strategic decisions than B-to-B marketers (56% versus 48%) and they are also more likely to work in partnership with the CEO to build and execute their company's strategic growth plan (58% versus 49%). See Page 5.
Are Marketing and Management Aligned?
Importantly, increased alignment is a positive by-product of a marketing reorganization. Past ANA studies have found that marketing's performance has suffered due to a misalignment of marketing's actions and the corporation's goals. This study shows that this issue seems to be dissipating. However, it is surprising that only 67% of B-to-C marketers feel they are on the same page as their management and that B-to-B marketers are much more likely to be in sync with management.
Are Marketing and the CEO on the Same Page?
While alignment within companies is growing, there is still a major disconnect between marketers and management. This most likely accounts for why just under 50% of B-to-B and a somewhat greater number (58%) of B-to-C marketers reported that marketing usually, if not always, works in partnership with the CEO to build and execute strategic growth plans. Additionally, as marketing in B-to-Bs was relegated to a communications role, a difference in strategic involvement is understandable.
Is Marketing Responsible for Sharing Best Practices Internally?
Surprisingly, sharing best practices throughout the company is more often a function of B-to-B marketing organizations (55%) than B-to-C organizations (45%).
How Engaged Is Marketing in Growth Decision Making?
Marketing has a limited voice in the approval process for growth-oriented investment decisions. Approximately two-fifths of the firms surveyed reported that marketing approves these decisions "most of the time" or "always." Approval power among recently reorganized firms seems to have diminished marketing's approval power, but once again given the issue of misaligned goals, this fact is not surprising. Only in rare cases (less than 10% in every firm category) did marketing never have to approve this type of investment decision.
How Broad Is Marketing's Internal Role?
The marketing teams of both B-to-B and B-to-C organizations offer a wide variety of services to their firms, with a majority of respondents reporting they offer a very wide range of services. Having a CMO seems to increase the likelihood that a marketing team will offer a very wide range of services. Sixty-one percent of companies with CMOs offer a wide range of services; only 51% of companies without a CMO also offer that breadth of services.
What Roles Does Marketing Fulfill?
B-to-B company marketing teams are much more likely to play a role in marketing research and generating leads. Nearly three-quarters also report playing a corporate strategy development role. They play lesser roles in revenue generation, new product development, and pricing.
Marketers in B-to-C companies are heavily engaged in marketing research (86% play a role), followed by corporate strategy development (72%), revenue and lead generating (65% and 64%, respectively). B-to-C marketers are more engaged in new product development but less involved in pricing than their B-to-B counterparts.
Who Has the Primary Role for Building Customer Relationship?
A major difference in roles is in building customer relationships. B-to-C marketers see that as an important role (42% report it is their responsibility) while few B-to-B marketers report that as a key responsibility (8%). In B-to-C, companies marketing and sales seem to play nearly an equal role building customer relationships, whereas sales has the primary B-to-B customer-building responsibility (72%).
To Whom Do CMOs Report?
CMOs, regardless of which segment they are in, report to either the CEO or president (81% B-to-B, 91% B-to-C). Interestingly, 11% of B-to-B CMOs report to the head of sales while only 2% of B- to-C CMOs report to sales. In all cases, the CMO is also a member of the leadership team.
What Was the Primary Driver of Marketing Reorganizations?
The factor driving the role changes is predominantly a reorganization, influenced by a major change such as a new CEO, a new CMO, business conditions, or the competitive landscape
Putting It All in Perspective
Past ANA studies have clearly demonstrated that marketing is the engine of growth. When marketing plays a strategic role, working in partnership with the CEO and senior management, there is a positive effect on revenue and profits which tends to increase up to 20%. However, marketing tends to only be in a leadership position 9% of the time. This survey reveals that marketing's role is elevating within the corporate structure.
Consistent with findings from earlier surveys, marketing department reorganizations seem to continue unabated. One-third of B-to-B and B-to-C firms underwent an extensive reorganization in the past three years, while close to 40% of firms experienced a moderate reorganization. The arrival of a new president, CEO, CFO, or CMO is reported to be the most-influential driver behind reorganization.
Changes in the structure of marketing departments have significantly transformed marketing's primary responsibilities. Survey results indicate a continuous growth of marketing's strategic responsibility, moving away from marketing communications. This shift in responsibility appears to be more pronounced among B-to-C marketers than among B-to-B marketers. Despite this shift, still 50% of all marketers report that their primary responsibility is marketing communications.
The changes in roles and responsibilities, most often driven by reorganization, have facilitated closer alignment between marketing's goal and corporate goals. Particularly among B-to-B firms, misalignment of marketing and corporate goals appears to have been the norm prior to the shifting of roles. In the wake of systemic changes within marketing departments, closer alignment - which the ANA has long-argued is a best practice - has undoubtedly followed. With the majority of both B-to-B and B-to-C marketers anticipating a reorganization in the next three years, we can expect that marketing's contribution to the attainment of overall corporate goals will be even greater than it is now.
Corporations changing the structure of their marketing departments tend to appoint a CMO position which may be the driving factor behind both the change in role from tactical (communications) to strategic and the initial reason for the reorganization. Although the vast majority of CMOs report to the CEO or president, among B-to-B firms surveyed, the CMO may more likely report to the head of sales (11% versus 2% for B-to-Cs). Regardless of to whom the CMO (or equivalent head) reports, in approximately 90% of firms, this individual is a member of the senior leadership team, working hand in hand with the CEO.
Source
"The Continuously Changing Role of Marketing." ANA; BtoB Magazine, March 2008.