CMOs are Stuck in the Past

According to TNS Media Intelligence, Internet marketing spending should grow by 13.4% in 2008. But strikingly, the research also confirms that the total marketing dollars spent on the Internet represents only 7.2% of the total amount spent on all U.S. advertising. The total US advertising budget is expected to hit $153.7 billion.

So looking at online marketing in the US, traditional marketing dwarfs the Internet. Online marketing is apparently still in the early adopter stage for many companies.

According to Knowledge@Wharton, there are a number of reasons why online spending has not grown as fast as some expected.

In their article of February 06, 2008 “If Online Marketing Is the Future, Why Are Some CMOs Stuck in the Past?” Marketing Professor Peter Fader makes this statement.

"When bad times come, people say, 'We can't abandon the brand. We can do those customer-centric things next year.' The CMO will stay with the skills and responsibilities that he has traditionally relied upon."

At the end of this article, Fader implies that CMOs are behind the times and are indeed stuck in the past.

“Too often, Fader notes, CMOs delegate their web-oriented customer-tracking initiatives. He has a set of test questions about customers that he often asks marketing executives, such as, 'What is the distribution of repeat purchases across your customer base?' or, 'Of all the new customers you acquire this year, what percent will be with you a year later?' Many proudly reply that they have systems in place and can get the answer in a few moments. That's not good enough, says Fader. ‘You need to know it. If a CMO does not have a good sense of this, all the talk about customer centricity is just lip service.’”

The truth of this statement is nothing new to direct marketers. We have experienced low adoption rates for the direct marketing strategy at every turn for the same reason.

I am not talking about what some companies loosely call “direct marketing.” But rather adopters of the full spectrum of the direct marketing strategy including testing, database marketing and CRM.

CMOs have historically focused on branding and the big picture avoiding the trenches to learn more about their customers’ purchase behavior patterns. Analytics has never been their strong suit.

Have you ever noticed how many companies still do not see the urgent need to build a true relational database? Those that don’t are starving for reliable marketing intelligence. But that is the modus operandi for many CMOs in corporate America.

I submit that the barriers that are slowing online adoption rates reflect the same barriers that have caused lower than ideal adoption rates for the direct marketing strategy in many companies.

The online revolution is the zenith of direct marketing if done correctly. Yet customer centric spending goes begging.

CMOs are not just stuck in the past. Some will not do what is required to make more of their advertising dollars fully accountable.

The pressure is on for making all spending accountable. But this intimidates both general agencies and their clients who have not yet mastered tracking and full accountability for their advertising budgets.

The Internet leverages the power of the database and direct marketing discipline like no other medium. But to reach maturity in many companies, it will require a transformation not only of the CMO, but a new thought pattern for the senior executives who hire those same CMOs.

Most CMOs are, after all, a reflection of what their managers demand.

Do you think, as I do, that some marketing decision makers “either believe in the effectiveness of the branding strategy or don’t regardless of the evidence?” and that “they either believe in the one-to-one marketing strategy or they don’t regardless of the evidence?”

Have you seen resistance to the new media by some of the CMOs you know or work with? Do you see a correlation, as I do, between the adoption of online marketing and the acceptance of direct marketing as a critical component in the advertising mix?

I’d love to read your thoughts on this.