The CMO Survey Report: Highlight and Insights August 2014

2. Mission -To collect and disseminate the opinions of top marketers in order to predict the future of markets, track marketing excellence, and improve the value of marketing in firms and society. -The survey is an objective source of information about marketing. It is a non-commercial operation dedicated to the field of marketing, not the sale of products and services. Survey Operation -Founded in August 2008, The CMO Survey is administered twice a year via an Internet survey. Many questions repeat to observe trends over time. -The August 2014 survey was the twelfth administration of The CMO Survey. Sponsoring Organizations About The CMO Survey 2

3. Survey Sample -4262 top U.S. marketers at Fortune 1000, Forbes Top 200, and top marketers who are AMA Members or Duke University Alumni and Friends -351 responded for a 8.3% response rate Survey Administration -Email contact with four follow-up reminders -Survey in field from July 22-August 12, 2014 -89% of respondents VP-level or above Results Interpretation -M = sample mean; SD = sample standard deviation -B2B = Business-to-Business firms; B2C = Business-to-Consumer firms Survey methodology 3

4. Topic 1: Marketplace Dynamics……………………………………………………… 5-10 Topic 2: Firm Growth Strategies…………………………………………………….. 11-14 Topic 3: Marketing Spending………………………………………………………… 15-26 Topic 4: Financial and Marketing Performance……………………………………. 27-33 Topic 5: Social Media…………………………………………………..…………….. 34-44 Topic 6: Marketing Jobs…………………………………………………………….... 45-49 Topic 7: Marketing Organization…………………………………………………….. 50-51 Topic 8: Marketing Leadership……………………………………………………..... 52-57 Topic 9: Marketing Analytics………………………………………………………..... 58-67 Survey topics 4

6. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Marketer optimism for U.S. economy reaches highest point in 5 years Figure 1.1.How optimistic are you about the overall U.S. economy on a 0-100 scale with 0 being the least optimistic and 100 the most optimistic? 6 47.7 56.5 57.8 55.6 63.3 52.2 63.4 58.4 62.7 65.7 66.1 66.4 40 50 60 70 80 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Marketer Optimism About Overall Economy

7. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Optimism for US economy remains high across all sectors; B2B service leads Figure 1.2.How optimistic are you about the overall U.S. economy on a 0-100 scale with 0 being the least optimistic and 100 the most optimistic? 7 48 45 48 46 51 66 66 66 66 64 66 68 66 65 65 0 20 40 60 80 100 Overall B2B Services B2B Product B2C Product B2C Services February 2009 February 2014 August 2014

8. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace 75% 69% 59% 49% 50% 34% 76% 71% 67% 52% 51% 31% 0% 20% 40% 60% 80% 100% Increased abilityto acquire newcustomers Increasedcustomer purchasevolume Customers will buymore relatedproducts & servicesfrom my firm Increasedability to retaincustomers Increased entry ofnew customersinto the market Increasedcustomer priceper unit February 2014 August 2014 Positive customer acquisition, retention, and growth metrics forecasted; price lags Figure 1.3.Forecasted customer outcomes in next 12 months (% of respondents) 8

9. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Figure 1.4.Customers’ top priority in next 12 months (% of respondents) Service trumps product as customer’s top priority; price inches up 9 31% 18% 17% 19% 9% 7% 26% 23% 19% 18% 9% 5% 0% 5% 10% 15% 20% 25% 30% 35% 40% Superior ProductQuality ExcellentService LowPrice TrustingRelationship Superior Innovation Brand February 2014 August 2014

10. Increased competition is expected – rivalry, price-cutting, and innovation Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Figure 1.5.Increased competitor interactions in next 12 months (% of respondents) 10 69% 59% 56% 41% 35% 23% 0% 20% 40% 60% 80% 100% More intenserivalry forcustomers More competitorprice-cutting More competitorinnovation Emergence ofnew domesticcompetitors Emergence ofnew globalcompetitors More cooperationon non-pricestrategies August 2014 *Question format used for the first time August-2014.

12. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Firms decrease market penetration and move toward riskier growth strategies in next year Types of growth strategies Existing Products/ Services New Products/ Services Existing Markets Market Penetration Strategy Product/Service Development Strategy New Markets Market Development Strategy Diversification Strategy * % of spending across growth strategies Growth Strategy Actual Spendingin Past 12 Months Expected Spending in Next 12 Months PercentChange Expected Market Penetration Strategy 53% 46% -13% Market Development Strategy 15% 17% +13% Product/Service Development Strategy 22% 24% +9% Diversification Strategy 10% 13% +30% Table 2.1.How growth spending is expected to change* 12

13. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Organic growth investments 74% of growth budgets Figure 2.2.How firms will grow in the next 12 months* * Percentage of spending across growth strategies 13 Organic growth 73% Growth from partnerships12% Growth from acquisitions10% Growth from licensing arrangements 4% B2B Product B2B Services B2C Product B2C Services Growth from within your firm (organic growth) 73% 75% 71% 77% Growth from partnerships 12% 11% 12% 12% Growth from acquisitions 10% 11% 11% 6% Growth from licensing arrangements 4% 3% 6% 5%

14. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace B2C companies are most likely to sell through the Internet Figure 2.3.Percent of company sales expected to be through the internet in next 12 months 14 Internet 11% Other89% B2B Product B2B Services B2C Product B2C Services Sales through Internet 10% 9% 15% 14% Sales through other channels 90% 91% 85% 86%

16. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Marketing budgets remain positive but trend downward since 2010 Figure 3.1.Percent change in marketing budgets in next 12 months 16 0.5% 1.1% 5.9% 9.2% 6.7% 9.1% 8.1% 6.4% 6.1% 4.3% 6.7% 5.1% 0% 2% 4% 6% 8% 10% 12% Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Change in Marketing Spending

17. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Expenses including in marketing spending Table 3.1. Marketing spending in your company include the following items (% of respondents) Overall B2B Product B2B Services B2C Product B2C Services Overhead costs associated with marketing 45.9% 48.2% 50.8% 35.8% 44.2% Salaries and wages of marketing employees 43.9% 50.0% 49.2% 29.9% 38.5% Marketing analytics 41.0% 42.9% 40.7% 43.3% 36.5% Marketing research 40.7% 42.9% 38.1% 47.8% 34.6% 17

18. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Sector differences in marketing spend Figure 3.2.Percent change in marketing budgets in next 12 months 18 6.7% 5.4% 6.4% 7.1% 5.8% 5.1% 4.4% 4.7% 7.0% 5.3% 0% 2% 4% 6% 8% 10% Overall B2B Product B2B Services B2C Product B2C Services February 2014 August 2014

19. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Companies increase digital spend at the expense of traditional advertising *Refers to media advertising not using the web. Figure 3.3.Percent change in traditional advertising* vs. digital marketing spend in next 12 months 19 1.3% -0.8% -1.9% -2.7% -2.1% -0.1% -3.6% 11.2% 12.8% 11.5% 10.2% 10.1% 8.2% 10.8% -5% 0% 5% 10% 15% Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Traditional Advertising Spend Digital Marketing Spend

20. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Digital marketing spend increases across sectors Figure 3.4.Change in digital marketing spending in next 12 months by sector 20 8.2% 9.0% 7.4% 7.7% 8.2% 10.8% 10.7% 11.5% 11.2% 9.0% 0% 2% 4% 6% 8% 10% 12% 14% Overall B2B Product B2B Services B2C Product B2C Services February 2014 August 2014

21. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Spend in other marketing categories is also increasing Figure 3.5.Percent change in marketing spending in next 12 months 21 5.1% 7.8% 4.0% 4.9% 7.9% 7.8% 4.5% 4.3% 0% 2% 4% 6% 8% 10% Customer RelationshipManagement New Product Introductions New Service Introductions Brand Building February 2014 August 2014

22. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Integrating knowledge and consulting services top knowledge investments *Developing knowledge about how to do marketing refers to the development of new marketing capabilities, while marketing training involves transferring existing marketing knowledge to employees. Figure 3.6.Changes in firm spending on marketing knowledge in next 12 months 22 2.7% 1.8% 4.9% 3.1% 2.4% 6.0% 4.0% 3.8% 3.8% 2.5% 0% 2% 4% 6% 8% 10% Integrating whatwe knowabout marketing Marketingconsultingservices Marketingresearch andintelligence Developingknowledge abouthow to do marketing Marketingtraining February 2014 August 2014

23. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace *Question asked in Feb-11 for the first time. Marketing budgets represent 10.9% of overall firm budgets Figure 3.7.Marketing budget as a percent of firm budget* 23 8.1% 10.0% 10.4% 11.4% 10.6% 9.4% 10.9% 10.9% 0% 2% 4% 6% 8% 10% 12% 14% 16% Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 % Marketing Budget

24. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Table 3.2a. Marketing percentage of firm budget by economic sector B2B Product B2B Services B2C Product B2C Services August 2014 10.5% 7.7% 17.0% 11.1% <$25 Million $26-99 Million $100-499 Million $500-999 Million $1-9.9 Billion >$10 Billion August 2014 11.9% 8.6% 11.8% 14.2% 8.7% 14.0% 0% Internet Sales 1-10% Internet Sales >10% Internet Sales August 2014 9.7% 10.7% 13.4% Table 3.2b. Marketing percentage of firm budget by company sales revenue Table 3.2c. Marketing percentage of firm budget by company internet sales Who has the biggest marketing budgets? 24

25. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Marketing spending as a percentage of firm revenues is 8.3% Figure 3.8.Marketing spending as a percentage of firm revenues* *Question asked in Feb-12 for the first time. 25 8.5% 11.0% 7.9% 7.8% 9.3% 8.3% 0% 2% 4% 6% 8% 10% 12% 14% 16% Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 % Marketing Spend

26. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Table 3.3a. Marketing spending as a percentage of firm revenues by economic sector B2B Product B2B Services B2C Product B2C Services August 2014 7.8% 7.5% 9.0% 10.4% <$25 Million $26-99 Million $100-499 Million $500-999 Million $1-9.9 Billion >$10 Billion August 2014 11.0% 7.3% 6.1% 3.7% 6.7% 11.9% 0% Internet Sales 1-10% Internet Sales >10% Internet Sales August 2014 7.1% 6.9% 12.5% Table 3.3b. Marketing spending as a percentage of firm revenues by company sales revenue Table 3.3c. Marketing spending as a percentage of firm revenues by company internet sales Marketing spending as a percentage of firm revenues by firm and industry 26

28. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Company performance on financial metrics positive but flat Figure 4.1.Percent change in firm performance in prior 12 months 28 3.9% 3.0% 3.4% 4.0% 3.2% 3.2% 0% 1% 2% 3% 4% 5% Firm sales Firm profits Marketing ROI February 2014 August 2014

29. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Performance on key customer and brand assets no significant change Figure 4.2.Percent change in performance on customer and brand metrics in prior 12 months 29 3.6% 1.9% 3.5% 3.3% 2.0% 3.7% 0% 1% 2% 3% 4% 5% Customer acquisition Customer retention Brand value February 2014 August 2014

30. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace B2B Product sector shows highest performance gains Overall B2B Product B2B Services B2C Product B2C Services Firm sales 4.0% 4.6% 4.1% 3.6% 3.0% Marketing ROI 3.2% 3.8% 3.6% 1.8% 2.5% Firm profits 3.2% 3.5% 3.1% 3.0% 2.8% Customer acquisition 3.3% 4.0% 3.1% 3.2% 2.4% Customer retention 2.0% 2.1% 2.2% 2.0% 1.3% Brand value 3.7% 3.7% 4.1% 3.5% 3.3% Table 4.1. Percent change in performance in prior 12 months by sector 30

31. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Firm performance goals remain strong Actual firm performance in prior 12 months Goal in the next 12 months Firm sales 4.0% 6.7% Marketing ROI 3.2% 5.2% Firm profits 3.2% 5.8% Customer acquisition 3.3% 5.9% Customer retention 2.0% 4.7% Brand value 3.7% 5.8% Table 4.2. Percent change in performance 31

32. Increased focus on marketing that benefits society and minimizes environmental impact Figure 4.3.Rate your firm on each the following non-financial metrics during the last 12 months (% Excellent & Goodon a 5-point scale where 1=Poor and 5=Excellent) Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace 32 36.1% 31.1% 41.6% 41.6% 0% 10% 20% 30% 40% 50% Marketing that isbeneficial for society Minimizing the impact of marketingon the ecological environment August 2013 August 2014

33. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace B2C companies more likely to be marketing leaders Figure 4.4.How would you rate your company’s marketing excellence? (7-point scale where 1=Very Weak and 7=Leader) 33 4.6% 5.5% 3.6% 6.8% 2.6% 44.6% 46.6% 47.6% 36.4% 43.6% 29.2% 30.1% 28.6% 31.8% 25.6% 21.7% 17.8% 20.3% 25.0% 28.2% 0% 20% 40% 60% 80% 100% Overall B2B Product B2B Services B2C Product B2C Services A Leader/ Excellent=6-7 Strong=5 Fair/Good=3-4 Very Weak/Weak=1-2

35. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Social media spending expected to be 21.4% of marketing budgets in five years Figure 5.1.Social media spending as a percent of marketing budgets 35 9.4% 13.2% 21.4% 0% 5% 10% 15% 20% 25% Current Levels Over Next 12 Months In Next 5 Years % of Marketing Budget

36. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Social media spending across sectors Overall B2B Product B2B Services B2C Product B2C Services Current Social Media Spending 9.4% 9.5% 9.2% 10.4% 8.6% Social Media Spending in the next 12 months 13.2% 12.6% 13.3% 15.0% 11.9% Social Media Spending in the next 5 years 21.4% 19.9% 22.2% 22.8% 21.0% Table 5.1.Changes in social media spending across sectors 36

37. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace No growth on human capital for social media: Tech investments appear to dominate? Figure 5.2.Location of social media employees In-house social media employees Outsourced social media employees B2BProduct 4.1 2.0 B2BServices 4.1 1.5 B2CProduct 5.7 3.9 B2CServices 4.9 2.1 Table 5.2. Social media employees by sector 37 1.7 2.4 4.1 2.9 1.1 1.3 2.1 2.1 0 1 2 3 4 5 Feb-13 Aug-13 Feb-14 Aug-14 In-house social media employees Outsourced social media employees

38. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Social media remains poorly integrated with marketing strategy 38 Figure 5.3.How effectively is social media linked to your firm’s marketing strategy? (1=Not integrated, 7=Very integrated) 3.8 3.8 3.8 3.8 3.9 3.8 3.9 1 2 3 4 5 6 7 Feb-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Mean Integration Level

39. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace B2C Product companies have the highest social media integration Figure 5.4.How well is social media integrated with marketing strategy? (1=Not At All Effectively, 7=Very Effectively) 39 24.9% 30.2% 25.8% 18.7% 19.5% 53.1% 51.9% 51.7% 54.2% 56.1% 22.1% 18.1% 22.5% 27.1% 24.4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Overall B2B Product B2B Services B2C Product B2C Services Top 2 Box=6-7 Middle 3 Box=3-5 Bottom 2 Box=1-2

40. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Persistent poor integration of customer information across channels Figure 5.5.How effectively does your company integrate customer information across purchasing, communication, and social media channels (1=Not At All Effectively, 7=Very Effectively)? 40 3.5 3.8 3.4 3.5 3.6 1 2 3 4 5 6 7 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Mean Integration Level *Question asked in Aug-12 for the first time.

41. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Only 15% of firms able to show impact of social media on business Figure 5.6.. Which best describes how you show the impact of social media on your business? 41 B2B Product B2B Services B2C Product B2C Services We haven't been able to show the impact yet 54.2% 42.0% 46.9% 30.8% We have a good qualitative sense of the impact, but not a quantitative impact 34.9% 43.2% 34.7% 51.3% We have proven the impact quantitatively 10.8% 14.8% 18.4% 17.9% Have proven the impact quantitatively 15% Haven't been able to show the impact yet 45% Have a good qualitative sense of the impact, but not a quantitative impact 40%

42. Social media metrics: Firms shift toward referral and text measures and away from financial metrics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Metrics August 2010 August 2014 Hits/visits/page views 47.6% 60.7% Number of followers or friends 24.0% 45.0% Repeat visits 34.7% 38.7% Conversion rates (from visitor to buyer) 25.4% 31.3% Buzz indicators (web mentions) 15.7% 24.2% Sales levels 17.9% 16.8% Online product/service ratings 8.2% 14.0% Customer acquisition costs 11.8% 13.7% Net promoter score 7.5% 12.8% Revenue per customer 17.2% 12.5% Other text analysis ratings 6.6% 11.7% Customer retention costs 7.7% 6.3% Abandoned shopping carts 3.8% 6.0% Profits per customer 9.4% 6.0% Table 5.3.Social Media Metrics Used by Firms* *Red indicates metric use has decreased; green indicates that metric use has increased, and changes of 1% or less are classified as no change. . 42

43. Use of online customer behavior data expected to increase over time Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Figure 5.7.Does your company use customer behavior data collected online for targeting purposes? Figure 5.8.Is your company's use of such data increasing, decreasing, or staying the same over time? 43 Yes41% No59% 81.7% 18.3% 0.0% 0% 20% 40% 60% 80% 100% Increasing About the same Decreasing

44. Most marketers have low levels of concern over the use of online customer data Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Figure 5.9.How worried are you that the use of online customer data could raise questions about privacy? Mean = 3.4 (SD = 1.6) 44 12.8% 20.2% 14.7% 22.9% 21.1% 7.3% 0.9% 0% 5% 10% 15% 20% 25% 1Not At AllWorried 2 3 4 5 6 7VeryWorried

46. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Marketing hiring positive but continues to decline Figure 6.1.Percentage change in marketing hires planned in next 12 months 46 6.2% 7.2% 5.2% 6.5% 5.4% 5.5% 4.7% 3.8% 0% 3% 6% 9% 12% 15% Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Increase in Marketing Hires in Next 12 Months

47. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Sector differences in marketing hires: B2B services largest hiring increase Figure 6.2.Percentage change in marketing hires planned in next 12 months 47 3.8% 2.3% 5.3% 3.8% 3.6% 0% 2% 4% 6% 8% 10% Overall B2B Product B2B Services B2C Product B2C services

48. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Outsourcing of marketing jobs increases Figure 6.3.Percentage of company marketing expected to be outsourced in next 12 months 48 3.2% 3.1% 3.5% 2.6% 3.1% 4.3% 0% 2% 4% 6% 8% 10% Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Percentage Change in Outsourcing

50. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Marketing employees 5% of total Figure 7.1.Marketing Employees as a Percentage of Total Employees 50 2.4% 2.0% 6.4% 2.3% 4.2% 1.1% 3.1% 2.5% 1.2% 6.3% 5.0% 0% 2% 4% 6% 8% 10% 12% Feb-09 Aug-09 Feb-10 Aug-10 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Percentage of Total Employees

51. Marketing and sales are equal partners in most companies, esp. B2B Product Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace 51 Figure 7.2. The marketing-sales relationship (% of respondents) 66% 12% 11% 8% 3% 0% 10% 20% 30% 40% 50% 60% 70% 80% Sales and marketingwork togetheron an equal level We don'thave asales function Sales isin charge ofmarketing Sales is withinthe marketingfunction We have a salesfunction, but not amarketing function Sales and marketing work together on an equal level B2B Product 75.0% B2B Services 59.7% B2C Product 61.5% B2C Services 66.7%

53. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Marketing leadership erosion in key strategic areas Table 8.1. Percentage of companies in which marketing leads activity* Weaker marketing leadership: •Promotion •Marketing research •Market entry •New products •CRM •Pricing •Target/Market selection •Innovation •Customer service Stronger marketing leadership: •Brand •Social media •Public relations •Competitive intelligence Activity Aug-13 Aug-14 Brand 80.7% 84.4% Advertising 83.9% 83.9% Social media 74.9% 78.4% Positioning 76.7% 76.9% Promotion 80.3% 74.9% Marketing analytics** 69.1% 68.3% Public relations 62.3% 65.8% Marketing research 66.4% 65.3% Competitive intelligence 55.6% 57.3% Lead generation 56.1% 56.3% Market entry strategies 54.7% 52.3% New products 48.4% 41.7% CRM 40.4% 38.2% Pricing 37.2% 32.2% Targeting/Market selection 39.9% 30.7% Innovation 32.7% 30.2% Sales 27.8% 26.6% Customer service 22.0% 19.6% Stock market performance 3.1% 2.5% * Red indicates marketing’s influence has decreased, green indicates that marketing’s influence has increased, and changes of1%or less are classified as no change. 53

54. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Marketing leaders retained for an average of 5.3 years; likely to be insiders Figure 8.1.Marketing leader retention 54 4.3 4.6 4.3 5.4 4.1 4.8 5.1 4.6 5.3 8.0 9.0 8.8 10.5 9.2 9.5 10.0 9.4 10.0 0 2 4 6 8 10 12 Aug-09 Aug-10 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Years top marketer in current rolein the firm Years top marketer in any role inthe firm

55. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Number of people reporting to top marketer Figure 8.2.Number of people reporting to top marketer 55 7.2 7.3 6.0 8.6 5.6 6.9 5.5 17.0 15.4 25.4 24.6 17.5 16.1 16.3 0 5 10 15 20 25 30 Aug-10 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Number of direct reports Number of indirect reports

56. Increasing pressure to prove the value of marketing Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Figure 8.3.Do you feel pressure from your CEO or Board to prove the value of marketing? Figure 8.4.Is this pressure increasing, decreasing, or about the same? 56 Yes62% No38% 65% 35% 0% 0% 20% 40% 60% 80% 100% Increasingpressure Same Decreasingpressure

57. Best Practices from Marketing Leaders: See full interviews at www.cmosurvey.org/cmo-insights/ Senior Vice President and Chief Marketing Officer Beth Comstock discusses how GE approaches marketing: “You have to create a platform that invites innovative ideas.” This platform involves four capabilities that have produced an array of new products, services, customers, and business models. Chief Marketing Officer Kim Feil discusses how she built a marketing function. From insights to accountability, she describes the organization, processes, metrics, and talent management strategies important to this effort. Executive Vice President and Chief Marketing Officer Geert van Kuyck shares ideas on building the essential skill set for CMOs and the importance of defining the CMO’s mission. He discusses the use of the Net Promoter Score and other metrics to evaluate business results at Philips, touching on Philips’ engagement with LinkedIn and social media metrics. Executive Vice President and Chief Marketing Officer Stephen Quinn describes how Walmart rebuilt its customer focus. Key steps involved harnessing internal support, generating market insight, using customer-focused metrics, living the brand internally, and building marketing talent. Global Marketing Officer Marc Pritchard shares views on how marketing contributes to P&G’s performance. He talks about how P&G learns about customers and how it is relentless in its attention to building loyal customers and strong brands in the store, on the web, and around the world. 57

59. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Spending on marketing analytics expected to increase 73% in three years Figure 9.1.Percent of marketing budget spent on marketing analytics 59 7.1% 12.3% 0% 3% 6% 9% 12% 15% Current Levels In Next 3 Years

60. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Spending on marketing analytics by firm and industry characteristics Current In Next 3 years <$25M 6.6% 11.2% $26-99M 5.8% 10.2% $100-499M 6.9% 11.9% $500-999M 7.5% 13.0% $1-9.9B 8.1% 15.1% $10+B 9.8% 13.9% Table 9.1c. Firm size differences Table 9.1b. Firm internet sales differences Current In Next 3 years 0% 6.5% 11.8% 1-10% 7.5% 12.5% >10% 7.9% 13.2% Table 9.1a. Firm sector differences Current In Next 3 years B2BProduct 8.2% 13.1% B2BServices 7.1% 12.0% B2CProduct 5.4% 9.8% B2CServices 7.3% 14.4% 60

61. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Only one-third of projects use marketing analytics; no improvement despite spending Figure 9.2.Percentage of projects using available or requested marketing analytics* 61 *This question was asked in Feb-12 for the first time. 37.0% 35.0% 30.4% 29.0% 32.5% 32.3% 20% 25% 30% 35% 40% 45% 50% Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Percentage using marketing analytics

62. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Contribution of marketing analytics remains low and is not improving Figure 9.3.To what degree does the use of marketing analytics contribute to your company's performance? 1 = Not at all and 7 = Very highly 62 *This question was asked in Feb-12 for the first time. 3.9 3.7 3.5 3.7 3.7 1 2 3 4 5 6 7 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Mean Contribution Level

63. Marketing analytics contributions by sector and firm differences 63 Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace To what degree does the use of marketing analytics contribute to your company's performance? (1=Not At All, 7=Very Highly) Table 9.2a. Industry sector differences Sector Mean (SD) Banking/Finance/Insurance 3.6 (1.7) Communications/Media 4.0 (2.1) Consumer Packaged Goods 4.0 (2.0) Energy 4.0 (2.2) Healthcare/Pharma. 4.2 (1.7) Manufacturing 3.3 (1.6) Mining/Construction 4.0(0.0) Retail/Wholesale 4.1(2.3) Service/Consulting 2.9 (1.9) Tech Software Biotech 4.3(1.7) Transportation 4.2 (0.8) Sector Mean (SD) B2BProduct 3.6(1.6) B2BServices 3.4(1.9) B2CProduct 4.3(2.0) B2CServices 4.2(1.9) Table 9.2b. Economic sector differences Table 9.2c. Firm internet sales differences Mean (SD) 0% ofsales 3.5(1.9) 1-10% of sales 3.7(1.7) >10% of sales 4.2(1.9)

64. Majority of companies do not evaluate marketing analytics 64 Figure 9.4. Does your company formally evaluate the quality of marketing analytics? Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace 64 B2C Services B2B Services B2C Product B2B Product Yes, evaluate quality 47% 38% 29% 24% No, do not evaluate quality 53% 62% 71% 76% Yes33% No67%

65. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace Companies lack quantitative metrics to demonstrate impact of marketing spending Figure 9.5.Metrics for demonstrating impact of marketing spending on business 65 37% 44% 19% 33% 44% 23% 0% 10% 20% 30% 40% 50% We prove theimpact quantitatively We have a good qualitativesense of the impact, but not aquantitative impact We haven't been able toshow the impact yet Short-Term Impact Long-Term Impact

66. Analytics Leadership Organization Jobs Social Media Performance Spending Growth Marketplace How companies measure marketing ROI Figure 9.8.How companies measure marketing ROI What percent of your marketing budget do you spend measuring your marketing ROI? •Mean = 2.31% •SD = 3.26% •95% Confidence interval = 1.83% -2.79% 66 Manager judgements19.8% Customer surveys20.7% Econometric modeling17.8% Experiments11.9% Other9.3% We don't measure marketing ROI20.4%

67. Next survey: January 2015 Participate: Sign up here Media: Press releases and coverage Feedback: Send comments to moorman@duke.edu Preview 67

The CMO Survey Report: Highlight and Insights August 2014

The CMO Survey Report: Highlight and Insights August 2014

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The CMO Survey Report: Highlight and Insights August 2014