Does the CMO matter? 5 facts every CEO must know

By Thomas Barta
Last updated: July 11, 2023

Five separate studies leave no doubt: CMOs and strong marketing teams are essential for company success.

Fact 1: Strong marketing departments have a clear positive effect on firm performance.

A breakthrough study, conducted over 16 years, analyzed 612 publicly traded U.S. firms spanning 60 industries. Published in the Journal of Marketing, it revealed a significant discovery: robust marketing departments have a consistently positive influence on long-term stock returns and short-term return on assets (ROA). Researchers, led by Feng et al., demonstrated that companies that prioritize marketers in strategic roles tend to excel in marketing and make better overall strategic decisions in the market.”

➤ In summary: A strong marketing function drives business performance.

Fact 2: Firms with a Chief Marketing Officer perform better financially

A second groundbreaking study provides compelling evidence that companies with a Chief Marketing Officer (CMO) in their top management team outperform firms without a CMO by an average of 15%, as measured by Tobin’s q. Using data from a 12-year analysis of 155 publicly traded U.S. firms, the research conducted by German et al. strongly supports the positive financial impact of having a CMO.

➤ In summary: CMOs play a pivotal role in driving financial performance.”

Fact 3: CMOs are the #1 drivers of forward-looking company strategy

With the backing of INSEAD’s Global Leadership Centre, we conducted an analysis involving 5,302 company leaders representing 179 countries. We assessed how these leaders rank senior marketers compared to their other direct reports based on The 12 Powers of a Marketing Leader.’The results reveal that CEOs consistently prioritize senior marketers above all other leaders in areas such as challenging the status quo, influencing changes in people’s opinions about the right course of action, and actively shaping the company’s strategy.

➤ In summary: CMOs are the guardians of forward-looking firm strategy.

Fact 4: Marketing’s power is rising

In the digital age, other C-suite leaders, ranging from the Chief Technology Officer to the Chief Operating Officer, are increasingly engaging with marketing-related efforts, like customer data management or customer touch-point design. Some have speculated about the diminishing influence of marketing, but this is not the case. As demonstrated by Feng et al. in the above mentioned research, spanning 16 years, the influence and importance of marketing departments in U.S. firms have steadily grown.

➤ In summary: The trend is marketing’s friend.

Fact 5: CMOs can be shape company success—if they choose to

Many Chief Marketing Officers (CMOs) operate within complex organizational structures and may not always have decision-making authority over all four marketing Ps: price, product, promotion, and placement. However, it’s important to recognize that CMOs wield more influence than commonly believed. In a second study, also featured in The 12 Powers of a Marketing Leader, we conducted research to explore the causal effects of marketers’ perceived business impact and career success. Our study involved a substantial sample of 1,232 senior marketers from 74 countries, and it demonstrated that marketing leadership behaviors account for over 52% of CMO business impact. While external factors like budgets, aligned goals, company culture, role clarity, and top management support undoubtedly play a role, strong leadership is the 1# driver for CMO business success.

➤ In summary: CMOs have the power to drive their firm’s success—and their own.

There has never been more evidence for the importance of strong marketing. Spread the word!