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CMO revival

UNC Kenan-Flagler Business School - Faculty Research - Chief Marketing Officers Do MatterDo chief marketing officers matter? You might not think so, based on what you’ve read in the business press.

“CMOs Rapped for Having Zero Impact on Sales” was an Advertising Age article in 2007 about a study published in the Journal of Marketing. Forbes declared “The CMO is Dead” in 2012. And in 2016 The Wall Street Journal reported on a study that found that average CMO tenure had dropped to 44 months as turnover in the job increased.

So if you’re a CMO, you can’t be blamed for being nervous when your boss wants to have a one-on-one.

Much of the negativity around CMOs is based on 2008 research that found they didn’t have any impact on a firm’s financial results. The study of 167 public companies by Pravin Nath of the University of Oklahoma and Vijay Mahajan of the University of Texas at Austin was published in the Journal of Marketing.

But research from Rajdeep Grewal, the Townsend Family Distinguished Professor of Marketing at UNC Kenan-Flagler, with Frank Germann at the University of Notre Dame’s Mendoza College of Business and Peter Ebbes at HEC Paris, breaks new ground. It suggests that the presence of a CMO does have a significant impact on company success.

The researchers found that firms with CMOs perform about 15 percent better than firms without a senior marketer in the C-suite.

“We basically show that yes, there is a causal link,” Grewal says. “The same firm with a CMO would perform much better than it would without a CMO.”

While CMO effectiveness will continue to interest scholars and company leaders, their new study – “The Chief Marketing Officer Matters!” – buries the notion that CMOs don’t matter.

How to measure CMO performance

The authors of the 2008 study that generated so many questions about a CMO’s value focused on a relatively small data set, used just one statistical model (between-effects regression) and acknowledged their short-term methods had significant limitations.

Grewal and his colleagues examined a much bigger swath of data for their study and ran it through several econometric models to ensure that differences in those models don’t lead to wrongheaded conclusions.

The first question a researcher examining CMO performance has to answer is how to measure it. Some of the obvious metrics — such as sales growth — aren’t ideal for all firms. For example, sales growth is a good metric for firms with a growth goal, but not for those focusing on profitability. Since determining a firm’s goals is difficult and those goals can change, goal-dependent metrics are not ideal.

To measure firm effectiveness, Grewal’s team chose “Tobin’s q” because it measures shareholder value and is agnostic with respect to organizational goals. They used different data sets and various econometric specifications to test the relationship between a company having a marketing executive on its top management team and the firm’s Tobin’s q.

To detect a CMO or equivalent, the researchers looked for executives on the firms’ top management teams who had the word “marketing” in their titles. First, Grewal and his colleagues did an analysis similar to the Nath and Mahajan study, looking at 123 public companies from 2000-2004 using a between-effects regression model. As expected, they got the same result: there was no significant difference in Tobin’s q for companies with and without CMOs.

Next they analyzed the same data with several more grounded econometric model specifications and found a significant and positive effect from CMO presence. They also looked at more data, including 155 companies from the same 2000-2004 time span. Grewal and his colleagues then looked at the original set of 123 companies over a longer period of time — 2000-2011 — and analyzed their 155-company data set over that 11-year period.

With each of those additional data sets, they estimated several econometric models. In the end, they found that CMO presence increases Tobin’s q by around 15 percent in almost all cases except when using the between-effects statistical model.

The study doesn’t cover every single way to assess CMO impact on shareholder value, but it comes close. Along with other research that shows positive impact from CMOs, this study should put to rest the question of whether CMOs matter.

“I would be surprised if it is overturned,” he says. “We did a very strong analysis to show the effect is truly there.”

Why CMOs matter

The “CMO effect” on performance is moderated by at least 11 firm-specific characteristics such as sales growth, number of employees, CEO tenure, the degree to which innovation is part of strategy and, to a lesser degree, differentiation strategies.

Grewal says that three characteristics make a CMO’s presence especially valuable:

  • Robust sales growth
  • Small firm size
  • Short CEO tenure

Other findings on the CMO effect include a positive impact on excess stock returns and no apparent direct impact on a firm’s sales growth. More research is needed to understand the CMO’s impact on firm risk. And there could be other factors that affect CMO performance – individual characteristics such as the CMO’s experience level, gender, education or influence within the firm.

The research doesn’t mean that simply adding a CMO will improve performance, advises Grewal.

“In firms that have CMOs, marketing probably plays a bigger role. By having a senior marketing executive in the C-suite, you’re basically saying, ‘Marketing is important,’” he says. “For CMOs struggling to prove their worth to their top management team, we hope our findings will help cement their presence at the strategy table.”


In 2020 Dr. Grewal received the Sheth Foundation/Journal of Marketing Award for this paper, “The Chief Marketing Officer Matters!” The award honors the article published in the Journal of Marketing in 2015 that has made the most important long-term contributions to the field of marketing.