When a chief marketing officer (CMO) leaves a company, the consequences extend beyond a temporarily empty boardroom seat. Replacing the role is time-consuming and costly, not to mention the intellectual property (IP) that leaves with the CMO when they exit the company.

Global consultancy Spencer Stuart has reported in recent years that the average CMO tenure is the shortest among C-suite executives at 4.6 years. B2C CMOs are particularly prey to these concerning numbers, with 22 percent in their roles for a year or less.

Why is this alarming?

Australians are grappling with rising cost-of-living pressures. The May Westpac Consumer Sentiment Index showed a 0.3 percent dip from April, indicating persistent and deepening consumer pessimism. 

In such a tight economic climate, B2C brands must stand out to attract consumers who are keen to maximise their spending and make every dollar count. This task is largely led by the CMO, who is responsible for product positioning, brand awareness, sales, customer experience and loyalty, all under the constraint of consistent positive marketing ROI. This challenging role may explain their short tenures, whether due to unrealistic expectations, lack of skills/experience, or both.

Replacing a new CMO every two years is costly. The Australian HR Institute estimates the true cost of replacing an employee can be up to 1.5 times their annual salary when considering direct and indirect costs. It’s a significant expense, putting extra strain on a company’s budget. Additionally, and perhaps even more concerning, is the significant loss of intellectual property. The CMO holds crucial knowledge about marketing strategy, execution, performance and reporting. Questions like ‘What campaigns are running?’, ‘What are the upcoming campaigns?’, ‘What’s worked in the past? What hasn’t and why?’, ‘What do we report on? How do we get the report?’ highlight some of the challenges faced by a company suddenly without a CMO.

For the new CMO, it’s a daunting task to quickly understand their new role and address these questions, all while simultaneously building a successful marketing approach. But it can also misguide CMOs and businesses to overly favour short-term objectives, focusing solely on the bottom of the funnel while neglecting top-of-funnel activity. While likely to be successful in the short term, brands can end up paying a high price in the medium and long term with such near-sighted strategies when the bottom of the funnel dries up. And when that happens, the revolving door of CMOs is often about to take another spin.

What can help?

Often overlooked during a CMO transition period is the agency on record. The brands’ agency partner can be a valuable repository of information, skilled in designing, executing, and reporting on marketing strategies. They might have even crafted the current strategy with the previous CMO so not consulting with them may be a huge missed opportunity.

Global consultancy R3 estimates the average agency-client tenure is 3.2 years, meaning that an agency might have seen several CMOs during their tenure. This makes agencies one of the most knowledgeable entities regarding a brand’s marketing strategy, direction and results, and an invaluable source of knowledge and insight. 

That being said, agency staff turnover also needs consideration. In 2022, the Media Federation of Australia (MFA) reported a talent churn in media agencies of 32.6 percent. Although this number dropped to 26 percent in 2023, it still remains high. This turnover means brands often face new agency team members who need time to familiarise themselves with their account, brand and strategy. Therefore, it is crucial for brands to vet their agencies and ensure they have long-standing and experienced staff on board and involved in their account, or they risk facing a double-whammy of both CMO and agency team transitions.

Proactively building strong collaboration with the agency on record offers brands much-needed redundancy and continuity during transition periods. Agencies can help new CMOs get up to speed quickly with their insights, experience and tenure with the brand. But in order to achieve this, brands need to integrate agencies beyond the CMO and build strong relationships with other key stakeholders to future-proof their business.

Also, read about Neale Whitaker getting behind the wheel of MINI’s ‘Next Generation’ campaign.