Why chief marketing officers need to up their product game
Digital marketing sucks. It really does. Not only for users, who increasingly turn to ad-blockers, struggling to keep their digital experience from deteriorating further. But also for chief marketing officers (CMO), who have to deal with more categories – search, affiliate marketing, social media, and suchlike – while still carrying their legacy from past efforts at marketing – brand identity, advertising, direct marketing, customer relationship management, public relations, events, channel marketing and many more.
Thanks to digital, all four marketing Ps (place, product, price, promotion) are now under massive pressure. Place was the first, with the rise of e-commerce since the mid-nineties. As smartphones spread, starting with the iPhone in 2007, the other three Ps quickly followed suit. We now have almost complete price transparency, which increases the pressure on many traditional businesses who still don't seem to get it. Advertising (promotion) also needs to reinvent itself. Interruptive advertising, that worked so well for more than 150 years, is rapidly becoming obsolete.
For the product, the final P in marketing, all this poses a huge challenge. The existing tools like advertising (promotion), distribution (place) and pricing (price) offer little room for differentiation. Thus, chief marketing officers need to up their product game. In the past, the traditional chasm between marketing and product development might have made sense. Today, that's no longer true. The product itself, product development and product management need to become front and centre.
Marketing, i.e. promotion and distribution, needs to be build into the product itself. The marketing legacy is replaced by a service layer that binds the user to the enterprise. The product shouldn't need the stimulus of external marketing to persuade customers to use it. Marketing performance must be part and parcel of the product itself. In a way, the chief marketing officer becomes the chief product officer. This means less dmexco and more Mind the Product (and of course NEXT), for example.
Chief marketing officers can learn from the skill sets of chief product officers, becoming adept in product management, strategy, user experience (UX), and product development, to name a few. Today, strategy is the only skill the CMO has in common with the chief product officer. This highlights an important shift: marketing strategy needs to become product strategy.
This could pay off well for CMOs. If we believe LinkedIn's data, the chief product officer makes more money than his CMO counterpart: While the median salary of a CMO is $218,000 per year, the chief product officer makes $261,000 – a whopping 19.7% premium.
This difference stems from a variety of factors, including supply and demand of suitable candidates, but first and foremost the amount of value these people create for their employers. Marketing all too often is boxed into the promotion corner, with advertising at its core, and therefore in many cases run as a cost centre, which it shouldn't. Instead, it should be viewed and structured as an investment that produces compounding returns over time.
Product, in contrast, often stands for innovation, and the overall willingness to invest in innovation is greater than the willingness to sink costs into marketing. Especially advertising suffers from the problem famously stated by John Wanamaker:
Half the money I spend on advertising is wasted; the trouble is I don't know which half.
Of course, the same could be said about product innovation, or about investment in general. Digital marketing started back in the nineties with the promise that everything could be tracked, including the efficiency and effectiveness of marketing. These promises turned out to be only partially true. Marketing and innovation both have an aura of magic around them. Both are driven by results (outcomes) that are measurable (more or less), but how to get there is still a process of trial and error, sometimes driven more by gut feeling and intuition than structure and process. The late and great Peter Drucker once wrote:
The business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.
Digital marketing that doesn't suck would stick to this sound insight.