The consumer-packaged-goods (CPG) and retail industries are entering an era marked by a focus on growth and a search for value. The past decade has been particularly challenging, with population growth slowing and consumer attention fragmenting. To respond, companies must push an ambitious dual agenda, as McKinsey outlined in a recent article. They need to find new pockets of growth through portfolio management and enhance capabilities to improve performance.
This mandate for change has implications for chief marketing officers (CMOs) and growth leaders. Despite facing higher expectations than ever, they’re being tasked with building strong brands and delivering growth while maximizing efficiency and effectiveness of marketing spending. It’s a big lift.
Marketing leaders are expected to apply new energy to identifying growth opportunities, bring their companies’ missions to life, build immersive and connected brand experiences, link purpose to business outcomes, capitalize on new technologies, and more. At the same time, CMOs are under increasing pressure to provide results and serve as responsible stewards of marketing resources to achieve growth agendas. They’re growth leaders whose remit continues to expand, with CMOs taking on more functional areas traditionally seen as outside the purview of marketing. Such areas include generative AI (gen AI), innovation, and sales and e-commerce.
To explore how the role of the CMO is evolving, we surveyed more than 100 C-level executives with growth and marketing responsibilities at consumer and retail companies of all sizes in Europe and North America. We asked them to assess the role of marketing in their companies’ growth agendas. We also asked them to evaluate the importance of crucial growth activities and capabilities and to assess company maturity across four key areas: marketing strategy, marketing performance, tech-enabled marketing, and marketing operating model.
We discovered that marketing leaders have a clear perspective on which capabilities now help drive growth, but there are significant gaps in maturity on many of the capabilities critical to building future-proof organizations, particularly in strategic areas related to new business building, ecosystem development, marketing performance driven by real-time data, and gen AI strategy. Furthermore, we discovered that at the crux of this disconnect between priorities and maturity is the fact that only a minority of growth leaders believe that they have fit-for-purpose operating models built to achieve their growth ambitions.
In this article, we look at the biggest challenges that CMOs face in defining, steering, and producing the growth agenda. With the world of marketing becoming more expansive and complicated, achieving growth means defining a new holistic marketing operating model. Such a model encompasses a strong organizational structure, clear processes, and reinvigorated capabilities under the rubric of a clear strategic direction. This model more seamlessly connects the dots across the wide-ranging responsibilities of high-growth marketing leaders. With this fit-for-future formula, consumer- and retail-marketing growth leaders can power the dual agenda of portfolio management and business performance.
Navigating more complex responsibilities
Achieving marketing aspirations and goals has become more challenging than ever as capabilities and tech have gotten more sophisticated. Marketing leaders are responsible for traditional marketing functions (such as brand, creative, and consumer insights) and for newer digital channels (such as performance marketing, retail media, and social media marketing). All this is table stakes. Now CMOs’ scope has expanded to include functional topics that span AI, commercial, design, innovation, and product capabilities (Exhibit 1). Consequently, the job of growth-marketing leaders has gotten more complex as they increasingly wear multiple hats in their organizations.
Employing four pillars of marketing excellence
Marketing leaders must deliver across four pillars of marketing excellence. They need to execute a clear marketing strategy with insight-led growth, produce best-in-class efficiency and effectiveness via marketing performance, and champion the latest and highest-impact tech-enabled marketing use cases, all while building a fit-for-purpose operating model. These pillars aren’t new, but success now requires that leaders build new capabilities that were once considered beyond the remit of the traditional marketing organization. Leaders acknowledge the importance of these skill sets, but these critical areas have significant gaps in maturity:
- Marketing operating model. Teams frequently incorporate the additional functional areas coming under the remit of marketing as add-ons to the existing structures. This reinforces organizational silos, creates duplication and layered decision making, and impedes agility. Future-proofing marketing means building and enabling plans that include all parts of an organization working together seamlessly, agile and flexible ways of working, the right mix of expert capabilities and partners, and the management of a growing capability portfolio. Most of our respondents don’t believe that their companies have this structure in place. Only 27 percent of consumer and retail marketing leaders report that their organizations have mature operating models with robust capabilities and distinctive talent and partnerships that enable them to deliver the most advanced marketing use cases (Exhibit 3).
Rewiring the operating model to propel growth
As demands become greater and more complex, the marketing operating model is the foundation needed to build distinctive capabilities and close gaps in critical growth areas. But before leaders take any action to respond to the evolving marketing landscape, CMOs must define a clear vision and mission that articulates what holistic growth means for the marketing organization. Developing a North Star growth strategy is a prerequisite. Only then can companies take steps to align their marketing operating models with their drive for holistic growth.
This means that there are ample opportunities for marketing leaders to connect the dots and release speed and agility. A modern, functional marketing operating model should have the ability to flex. It should be able to accommodate new skill sets, new ways of working, and more advanced use cases. To succeed, marketing and growth leaders can focus on three areas: connecting teams through organizational structure, connecting ways of working through governance and culture, and connecting expertise to growth drivers through capabilities.
Connecting teams: Organizational structure
The first imperative for reenergizing and reimagining a marketing operating model is to take a good, hard look at how well a company is organized for growth. To be effective, CMOs need the ability and agility to consistently work across functional silos, build and scale capabilities, share best practices, and set cascading growth objectives. Sometimes, the disjointed nature of an organization can be a challenge. Critical remedies include dismantling barriers to mobilize cross-functional teams for growth, driving strategic priorities cohesively, and developing areas of excellence for new capabilities.
Mobilize beyond reporting lines. As marketing has become more complex, there’s a natural organizational tendency for verticals to develop. But those verticals can become silos that are too walled off from one another. Some companies, however, are figuring out how to bridge the divides. Of the surveyed marketing leaders, 37 percent say they’ve developed a successful way of collaborating within marketing (for example, across media and content) and across functions (for example, with e-commerce, product, and sales). Modern marketing teams work in cross-functional teams with shared goals, instilling more end-to-end accountability and mobilizing beyond reporting lines.
Pull up to scale up. Our research shows how important it can be to pull up certain strategic priorities, such as gen AI and AI, rather than defer to fragmented teams across categories or regions. Only one in four survey respondents from mature organizations believes that centralized decision making is a top strength of their company. The rest struggle with fragmented decision making, which can inhibit an organization from surfacing and scaling pockets of excellence and implementing best practices. Importantly, centralization doesn’t mean that a global organization needs to expand or take more on. Instead, modern marketers can establish more centers of excellence with capabilities that stay close to the brand, category, region, or product that needs them. But the centers can scale and share their lessons more widely.
Successful CMOs don’t wield pulling-up capabilities as a blunt tool. Instead, they make deliberate choices about where it’s most important to turn up the dial—for example, by quickly building new capabilities, such as gen AI; leveraging economies of scale in areas like content production; and driving global consistency toward consumers through brand management. In some cases, they may want to spin off globally developed capabilities to serve local needs. Some marketing tasks benefit from regional influence on traditional media channels, shopper-marketing execution, and management of local hero brands.
Connecting ways of working: Governance and culture
The second imperative for a new marketing operating model is to define clear governance that helps an organization pivot quickly and adapt to a changing consumer landscape in an agile way. CMOs can pave the path by shaping the right governance and culture to encourage entrepreneurialism for growth (see sidebar “How PepsiCo transformed the operating model of its global food group”).
Create ground rules. Robust governance is the ability to cascade marketing strategy consistently across brands, categories, and markets and efficiently orchestrate cross-functional processes. It’s a necessary piece of an effective marketing operating model. However, establishing clear governance is challenging, particularly in highly matrixed organizations with multiple brands and categories. In the survey, only 12 percent of marketing-growth leaders cite effective and clear governance as a distinctive feature of their companies’ marketing operating models. By clearly articulating decision rights, process flows, responsibilities, and roles, marketing organizations can successfully enable their teams to collaborate more effectively, make decisions more rapidly, and spend more time on the parts of the job that create the most impact.
Provide incentives for agility. A common challenge that hinders many marketing organizations is that their cultures don’t foster flexibility. Only one in four survey respondents says their companies have an agile, test-and-learn culture. And only one in eight says their companies are nimble enough to adapt to customer needs in real time.
Fortunately, it’s possible to achieve agility and flexibility by resetting mindsets to chase progress, not perfection. Leaders can demonstrate the notion that failing in front of the boss is OK, further strengthening an organization’s openness to change and experimentation. Leading marketers foster a strong ownership mentality among team members by assigning clear growth objectives and deliverables rather than predefined activities. They inspire team members to look beyond their job descriptions for growth initiatives and encourage a culture of forgiveness, not permission.
Connecting expertise to growth drivers: Capabilities
To achieve companies’ growth agendas, marketing leaders must make bold, meaningful investments in growth capabilities. This includes existing but potentially underdeveloped areas, such as creativity, as well as analytics and data. It also includes cutting-edge capabilities, such as gen AI. Partnerships and outsourcing of specialist capabilities also remain crucial, as does balancing new and existing capabilities (see sidebar “How Campari injected new life into experiential and digital marketing”).
Overinvest in what matters. While marketers often have many elements of the right capabilities, these can be unevenly developed. Through our research, we’ve found that there are three areas that could be better woven into marketing DNA. There’s no need to do everything all at once. Instead, prioritize and tackle one piece at a time by first nailing the basics, then laying the foundations to scale:
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Embed analytics and customer data at the core. Marketing-led growth relies on data to ensure that strategic choices are fact based and rooted in a deep understanding of the consumer. However, many marketers still struggle with fully leveraging analytics and insights to drive decision making. In fact, 64 percent of our respondents say they make marketing decisions that aren’t primarily influenced by analytics.
This gap in data-based decision making has three root causes: the lack of a clear and competitive data strategy to identify the right level of insight, capability and tech gaps preventing the use of real-time data, and gaps in consumer understanding and data availability (Exhibit 5). Marketing leaders can overcome these challenges to define a clear data strategy that’s grounded in priority marketing use cases and supported by the right data and tech stack to achieve strategy and growth objectives.
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Embrace scalable gen AI use cases. A 2023 McKinsey report on the economic potential of gen AI found that gen AI productivity in marketing could be worth about $463 billion annually. CMOs say they embrace this promise, with 74 percent of our survey respondents viewing gen AI as more of an opportunity than a risk. However, a gap remains between the importance that marketing leaders place on gen AI and how far they feel their organizations have progressed in building relevant capabilities for it. Only 9 percent state that they have evaluated gen-AI-enabled automation opportunities, just 5 percent are building gen AI capabilities, and a mere 4 percent are scaling up gen AI use cases.
When naming the greatest challenges that have prevented surveyed marketing leaders from adopting gen AI, 57 percent say their companies don’t have the necessary expertise or talent in place. Nearly half of respondents say their companies don’t have a clear gen AI strategy or obvious use cases.
Nonetheless, marketing leaders are starting to take some steps toward adopting gen AI by supercharging the activities that they already do and selectively deploying the tech across the marketing funnel (Exhibit 6). The most common use cases that respondents report are creative efficiency (39 percent), personalization at scale (28 percent), media optimization (28 percent), and automating the business of marketing (which includes noncreative tasks, such as drafting internal marketing assets, conducting web search scans for initial insights, and exploring initial ideation) (22 percent). Additionally, 20 percent are testing use cases for customer experience improvement, including an offering of interactive discovery and response experiences for customers through search or chat.
- Produce true creative excellence. Creativity continues to be a crucial driver of marketing-led growth, with 30 percent of surveyed marketing leaders agreeing that it’s their most important. However, a surprisingly low number (16 percent) of CMOs report investing time in building creative strategies that are linked to business outcomes and commercial performance. Illustrating the link between creativity and growth is critical to uncovering the role that marketing can play in driving enterprise growth.
Craft dynamic partnerships. While investment in internal capabilities can strengthen a marketing organization considerably, for most companies it isn’t practical to build all specialist expertise in-house. Marketers rely on partners to provide crucial skills and experience. However, they don’t always pay sufficient attention to optimizing these external relationships. CMOs should ensure that such relationships are mutually beneficial and growth accretive.
While 34 percent of CMOs responding to our survey agree that third-party partnerships are central to achieving a marketing agenda, only 43 percent manage those relationships as components of a strategic ecosystem. Others are more likely to end up with a long roster of agencies, freelancers, and vendors. These third parties often have duplicative capabilities and, at times, inconsistent or opposing objectives—particularly in areas such as e-commerce, retail media, and social media. Marketing leaders can consider spending less time pruning and managing their roster of agencies and more time evaluating and optimizing the ecosystem of partnerships to maximize efficiency and effectiveness. Only 25 percent of our survey respondents say they’ll reduce their reliance on agency partners in the near future, so there is a heightened need to create partnerships that benefit both parties.
Successful players orchestrate a complementary ecosystem of strategic partners to power marketing-led growth. This ecosystem consists of not only outsourcing to agencies but also investing in true, meaningful, enduring, and mutually beneficial relationships. Examples include making partners an integral part of marketing from strategy to execution, sharing the same business incentives, and continually building internal capabilities.
Marketing leaders are highly selective about whom to bring on board in the first place. They build third parties into the marketing strategy to become true partners, not just vendors. They also manage partnerships proactively to ensure two-way knowledge exchange and capability building that will benefit their organizations’ internal knowledge bases.
As the consumer-and-retail industry moves forward with a dual agenda of portfolio and performance, the importance of marketing to help drive growth is clearer than ever. While this creates complexity and new challenges, it also presents vast opportunities for companies to reorient their organizations for growth. Strategies to reboot the marketing operating model for agility and scale include collaboration across silos; cultivation of a diverse portfolio of internal experts; development of a fast, flexible, and entrepreneurial culture; strong governance; targeted centralization; and complementing all the elements with an ecosystem of true partnerships.
A future-fit operating model can enable consumer and retail marketing leaders to achieve the dual-growth agenda by connecting teams, connecting ways of working, and connecting expertise to growth drivers. It’s an ambitious plan, but marketing leaders are already getting it right.
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