The most commonly asked question in marketing these days is: “Why doesn’t marketing have more influence? Why doesn’t marketing have a seat at the board of directors’ table and when will it get one?”
You can’t read a marketing publication these days without senior marketing leaders uttering disappointment with marketing's lack of influence at executive management level and, at the same time, proclaiming the coveted executive seat as the primary and self-evident goal. I think it’s the wrong question to ask and certainly the wrong goal to have. Indeed, there is a tendency for the marketing department to see a decline in its influence within companies, and even in the respect in which it is held. This has been the case for the past 10 years, some might say 20 to 30. What are the reasons for this?
1) Marketing is also operations
Marketing has always had operations to manage. But it has become more operations-heavy with the advent of digital media and a more globalized multi-channel landscape. So marketers spend more and more time on daily operations, but they often forget that marketing operations is strategic too, and should be managed with as much focus on ROI as the marketing strategy. Efficient operations contribute to the bottom line and senior marketing leaders are not as obsessed with this as they should be.
2) Marketing has become a victim of its own success
Increasingly, companies have become market and customer oriented and thus the ability to understand the customer and the very ‘ownership’ of the customer has been adopted by a number of functions from R&D to customer service - and can no longer be claimed solely by marketing.
3) Some marketing disciplines no longer belong to marketing
Disciplines that have traditionally belonged to marketing have become increasingly specialized and/or have grown in importance. Thus they have become separate departments, for example strategic planning, market research and analytics, digital, CRM, new business development, product development, pricing, and public relations. The marketing responsibility has spread.
The downward spiral
I’m talking broadly of course. There are companies where marketing encompasses strategic planning and all of the 4Ps through to loyalty and relationship management, for example the big CPG and brand organizations. But let’s face it, in many many instances marketing has been reduced to - or hasn’t successfully progressed from - a marketing communications role whose main remit lies in deciding whether Ronald McDonald should have his own Facebook page or not. In fact, survey upon survey reveals that companies and marketing executives alike perceive marketing as such. No wonder that marketing’s influence within the firm is decreasing. And unfortunately, it makes the demand for an executive seat begin to sound like whining.
Is marketing’s influence actually important?
So what does drive marketing’s influence? What determines whether marketing gets the proverbial nod? And is it important at all for business performance? A piece of research by two Dutch marketing professors, Peter C. Verhoef and Peter S. H. Leeflang, of the University of Groningen, explores just that. Their article “Understanding the Marketing Department’s Influence within the Firm” summarizes their research among several hundred Dutch firms. Here, they conclude that 1) marketing’s influence within companies is “moderate”, 2) there are two main drivers of marketing’s influence, and 3) no positive link between marketing’s influence and business performance can be established.
On a bad day this would make a grumpy CEO conclude that the marketing department is not needed, let alone a marketing director on the board! So what should the wise marketing executive do?
What can be counted... counts
The second most commonly asked questions in marketing these days is: “How can we better link return on marketing investment to business performance?” Lo and behold, according to Verhoef and Leeflang “accountability” is one of only two drivers of marketing influence within the company. That is, linking marketing objectives and results with financial objectives and results.
Deliver growth, not creativity
The other driver is “innovativeness”, says the research. Not as in ‘finding new ways to market products/services’ but as in ‘contributing to new product/service development’. The tangible contribution to the company’s growth - new stuff we can make money on - is considered more valuable than the less tangible creativity in positioning, branding and communication.
Focus on the right things
I will dive deeper into Verhoef’s and Leeflang’s study in my next article here at CMO.com. Why the hair-raising conclusion that marketing’s influence does not positively effect business performance? How might marketing counter this? And what are the implications for marketing departments for (re-) gaining influence?
Meanwhile, let’s consider this; last year when Lego announced yet another superior annual business result, the CEO Jørgen Vig was asked: “What market share should Lego have globally? What’s your target?" Vig answered: “I don’t have a specific target for Lego’s market share, it’s not a goal in itself. We measure our success primarily in terms of customer satisfaction and how much kids recommend Lego to others. The growth and market share is a result of that strategy."
Influence or not - is that the question?
Jørgen Vig’s principles can be applied to this discussion: The question is not “Why doesn’t marketing have more influence?” because the goal is not and can never be to get influence. The goal is and must always be to deliver results that benefit the business. So the question is rather “What can marketing do to improve business outcomes?” Focus on that and influence will come. And hey, maybe even a seat at the executive table. Just don’t make that the marketing department’s measure of success.
About the research
The article “Understanding the Marketing Department’s Influence within the Firm” is written by marketing professors Peter C. Verhoef and Peter S. H. Leeflang, University of Groningen, The Netherlands. It was first published in Journal of Marketing, Volume 73, March 2009. © 2009, American Marketing Association.