Consumer packaged goods and retail brands are shifting more growth responsibility to marketers as they respond to fragmented consumer attention and slowing population growth, according to McKinsey & Company.
Chief Marketing Officers (CMOs) are being tasked with new functions across the commercial performance axis, including areas like shopper and R&D insight, product innovation, and generative AI – and beyond. These additional responsibilities may fortify organizational silos and layered decision-making, thereby impeding agility. Only 27% of CMOs believe their operating models are sufficiently mature to meet these new challenges.
The new research ‘Connecting for growth: A makeover for your marketing operating model’, explores the strategic, technological, operational, and performance-related gaps that consumer CMOs need to address with a fit-for-purpose marketing operating model to future-proof their companies’ growth.
The insights and trends include:
The consumer CMO remit has expanded across the commercial performance axis to now include customer and R&D insight, product innovation, and generative AI
CMOs say traditional marketing functions like content and creative (83%), consumer insights (78%), and communications (64%) are now table stakes. Now their scope has expanded to span commercial elements, including shopper insights (63%), promotions (61%), design (46%), sales/e-commerce (34%), product innovation (24%), pricing (35%), and generative AI (22%).
- Brand-building and full-funnel marketing top the chart for strategic imperatives, but there’s a distinct gap in operational maturity for key marketing growth areas
87% of CMOs believe that brand-building is ‘strategically important’, but only 58% rate their companies as ‘mature’ or ‘extremely mature’ in this respect. There are similarly significant gaps for deploying full-funnel marketing strategy (78% – 39%), KPI clarity (75% – 43%), strategic budgeting (72% – 47%), and defining a creative strategy (71% – 31%).
- Eight in ten CMOs see rigorous marketing performance management as a must-have, but only four in ten are confident in their capabilities
83% of CMOs say ‘measuring marketing performance’ is important. However, only 41% say their companies are ‘mature’ in this ability. There are similar gaps in perceived importance versus proficiency for dynamic spend adjustment (82% – 30%) and delivering personalized targeting (71% – 23%).
- Three quarters of marketers see the $463 billion generative AI marketing productivity as an opportunity, but only 4% are scaling up gen AI use cases
There’s a gap between CMOs’ belief in AI’s potential (a previous McKinsey report forecast its productivity value at $463B annually) and how far their companies have come in realizing that promise. 74% say they view Gen AI as an opportunity more than a risk. But only 9% have evaluated Gen AI-enabled automation opportunities, just 5% are building Gen AI capabilities, and a mere 4% are scaling up Gen AI use cases.
- Marketers are taking some steps to supercharge full-funnel marketing activities with generative AI
Top use cases include creative efficiency (39%), personalization at scale (28%), media optimization (28%), and automating the business of marketing (22%), including non-creative tasks such as drafting internal marketing assets, web search scans for initial insights, and initial ideation. Twenty percent are also testing use cases for customer experience improvement, including offering interactive discovery and response experiences for customers through search or chat.
- Four in ten marketing leaders with robust operating models cite a link between marketing activities and business outcomes as their biggest differentiator.
The marketing operating model is deemed foundational to building distinctive capabilities and driving growth. Leading strengths include a clear link between marketing activities and business outcomes (42%), clearly articulated marketing strategy (39%), sufficient budget (35%), and distinctive talent/capabilities in priority marketing functions (32%).
- Marketing leaders face a wide range of challenges when it comes to advancing their operating models.
The biggest challenges for marketing leaders who work in companies with less mature operating models are related to a siloed structure and a lack of cross-functional collaboration (36%), insufficient budget to support desired marketing activities (34%), insufficient talent/capabilities in-house (32%), incoherent strategy (32%), and insufficient budget to support resourcing requirements (28%).
Biljana Cvetanovski, partner, McKinsey’s growth, marketing & sales practice, comments: “The CMO’s role is continuing to evolve. It has now expanded to encompass design, innovation, pricing, sales, e-commerce and generative AI – all in the service of sustainable and profitable growth. While CMOs understand growth drivers, there are gaps in some of these new critical capabilities. To succeed, marketing leaders need to focus in on how to connect for growth: Connecting their teams with the right structure, connecting ways of working through governance and culture, and connecting their expertise to specific strategic growth drivers. By leveraging advanced technologies and investing in these areas, brands can turn their strategic vision into tangible results.”
Stefan Rickert, senior partner, McKinsey’s Consumer Packaged Goods and Retail practice, comments: “It’s a challenging time for consumer brands as many face decline in household penetration and transactions against the backdrop of fragmented consumer attention. The chasm is widening between brands that find growth out of reach and those that manage to win by adapting and building cross-functional, tech-enabled operating models. Those that move first are poised to make incremental, sustainable gains in the months and years ahead.”
