Every day we read about the changing role of the CMO and their increased responsibilities and impact on the business. But nothing says marketing has successfully morphed as much as its responsibility from a cost center to a P&L. Once a function has P&L responsibility, it has no choice but to deliver – to meet measurable goals that contribute significantly to the top and bottom line. With the growth of digital commerce and marketing’s increasing role in it, marketing now has a direct line of sight to revenue.
Scott Davis, author of “The Shift: The Transformation of Today’s Marketers into Tomorrow’s Growth Leaders”, says that for senior marketers to become visionary leaders, a P&L mindset is a requisite. The P&L is where marketing strategies and tactics will ultimately be measured for their effect on the bottom line.
CMO’s Comment on Advantages of Having a P&L
Kevin Hall, formerly CMO at Hanesbrands, quoted in a SpencerStuart report, said “Linking what you’re doing as CMO to a P&L responsibility enables you to implement the change there the fastest. It allows the business to serve as a learning lab, and others can see the results that marketing can bring.”
As Dennis Cary, former SVP, Chief Marketing and Customer Officer at United Airlines, put it, “A P&L orientation will always enhance the credibility and support you receive from your executive peers.” Source: Scott Davis
Adobe’s CMO, Ann Lewnes, says she believes it makes her more credible and more conversant. Owning a P&L, she says, helps marketers get to the place where they understand the product and the customer in an intimate way, enhancing their ability to be a credible resource for the business. Source: AdAge
CMO Job Postings Call Out P&L Responsibility
Where formerly a “P&L mindset” was required, now we’re seeing actual P&L responsibility. Look at these two job openings for CMOs:
“Reporting to the CEO, the CMO will have overall strategic leadership and P&L responsibility for an industry leading portfolio of brands. With a staff of x marketing professionals, this individual will oversee all facets of a brand with a leading presence in a number of significant product categories. As the company has aggressively embraced a market driven, brand management structure, the CMO will not only have full P&L responsibility with a marketing budget of $x, but will also be expected to bring a highly visible leadership both internally and externally to the company and its brands across multiple product categories. This position is one of the top 15 executive positions in the company and is a key member of the Executive Team, which is charged with guiding the overall strategic direction of this $x corporation.”
“The global Chief Marketing Officer will have executive level responsibility for leading enterprise-wide marketing, corporate communications and digital marketing globally across all lines of business. This senior executive will be a key business partner and high-impact functional resource for line business leaders and geographic region leaders in achieving the next generation of business growth. This individual will have P&L responsibility for delivering revenue (including new channels of distribution), overseeing and building/directing a team of x people.”
Gartner Reports Two Out of Five Marketers Have Their Own P&L for Sales from Digital Channels
We realize that revenue attribution is still an inexact science, and the measurement of conversions through traditional sales channels has its limitations. However, revenue from digital channels such as a proprietary e-commerce website, third-party storefronts, and commerce transactions on social networking sites is easier to measure. Digital channels are where marketing frequently has significant – sometimes total – responsibility.
Gartner has asked the same question in three separate surveys – “Does your marketing organization have its own P&L to capture revenue from sales that are made through digital channels?” We had 688 respondents – all from companies with revenue greater than $500M. Respondents included not only marketers, but Finance, business unit managers, strategic planning, and sales managers.
– between 41% to 46% answered yes, marketing has its own P&L.
– between one-quarter to one-third said they share a P&L with a business unit or brand.
– more plan to have their own marketing P&L within 24 months.
This week, Gartner features key findings from the most recent of the surveys, “The Evolving Role of Marketing in Digital Commerce”, available to clients. For more information, see http://www.gartner.com/marketing/digital/
Clearly, the shift is underway.