June 2005
What do CMOs want?

Fierce competition and the drive for new products and ideas have made marketing far more important to corporate success than it was five years ago. Today, 47 percent of Fortune 1000 companies employ a chief marketing officer. Where do shows fit in their marketing mix?

By Maxine Golding


“If you can’t help a sponsor grow revenue by providing some strong guidance on how you will help us attract and retain customers, few serious marketers will have time to talk.”

Those are strong words for show organizers from Nortel Networks’ Chief Marketing Officer Clent Richardson. But he and other CMOs are throwing down the gauntlet. The vehicles marketers ultimately choose are those that offer the best business case. So if you want to get in the CMO’s door, bring real value to the table.

“I don’t think any show organizer has ever tried to understand my pain,” says Akamai Technologies CMO Lisa Arthur. The pain of budget constraints: Akamai only has so many dollars to spend, and trade shows and events can represent a big chunk of its marketing spend. The pain to stand out above any competition. “Shows can be dilutive,” she says. “You’re one more fish in the pond.”

Following in the footsteps of CEO, COO and CFO, the CMO moniker is fast becoming the darling of the business world. But even with 47 percent of Fortune 1000 companies now boasting a CMO, the role is “poorly defined at an alarming number of companies,” according to a marketing study by the Association of National Advertisers (ANA)/Booz Allen Hamilton.

It could mean a lot to show organizers if the companies exhibiting at your exposition, sponsoring your program, or using their own private events to compete with yours employ this titular marketing leader. What exactly does the CMO do and just where does the CMO fit in exposition and event decision-making?

“Put simply, the CMO is responsible for ensuring that marketing objectives and resources align with business objectives,” says Richardson. “The CMO function must offer the same level of quantitative oversight and effectiveness as a CFO or COO.”

Fierce competition and the drive for new products and ideas have made marketing far more important to corporate success than it was five years ago, say 75 percent of senior and mid-level managers surveyed by ANA/Booz Allen Hamilton.

But don’t expect to see “shows” or “events” specified within the primary responsibilities of many CMOs. These are still typically the purview of product marketing teams. “A good CMO will have a great event marketing team,” says Richardson. “My time as a CMO is best spent at the macro planning and evaluation level.”

The push-pull between strategic and tactical demands, though, requires a real balancing act. Arthur spends the bulk of her time on strategy for Akamai, but “I walk a fine line in having enough detail, metrics and point of view to go to market and implement the strategy,” she says.

That disconnect showed up in Staging & Gauging: Do Events Pay Off?, a survey from the CMO Council (which represents nearly 1,200 technology companies) in association with the Computer Event Marketing Association (CEMA). While seven of 10 CMO respondents see their involvement in mapping and evaluating event marketing programs as “active,” fewer than four of 10 event managers believe their CMOs are actively involved. Events are an essential line item for only 56 percent of these CMOs, selective based on need for 31 percent and discretionary for 13 percent. It’s easy to see why: 36 percent find event marketing a “vehicle that is hard to quantify and measure value.”

The issue of channel management emerged as well in CMO RealityCheck™, a new quarterly survey by CMO magazine of leading marketing executives across all industries. Nearly four of 10 respondents are “not satisfied” with their channel management. Maybe that’s because only a third track qualified leads among their ROI metrics.

Proof and More Proof
That brings us to the core problem marketers have with events.

“It’s incumbent upon show organizers to present a compelling story as to why attendance at their event will quantitatively improve results,” says Richardson. This comes from a CMO who calls himself “vehicle-agnostic, but ruthless on measurement. In our organization, the dollars flow where the results happen.”

DuPont marketers decide the communication strategies and media that provide the best avenue to reach its target audiences at the right time and in the right way to influence their buying decisions. “We cannot categorize one message delivery method as ‘the best’ as it depends on each target,” says CMO Diane Gulyas. Consequently, the chosen communication channels vary with each planning year.

Show organizers who understand this realize they must not only prove their exposition’s worth every year, but also provide increasing evidence of value. Yet just 30 percent of tech sector CMOs responding to the CMO Council survey believe they’re supplied with sufficient information to evaluate a show’s value and return. At the same time, almost one in five of these CMOs budgeted no money for event measurement, and a third devoted less than $10,000.

Where’s the two-way street, with both parties — exhibitor and show organizer — jointly shouldering the burden of proof?

Companies know they’re accountable for showing how marketing expenditures add to shareholder value. “We need to assess how participating in trade events will contribute to profits in the short-run and longer-term. We also need to understand how the event can influence what customers know, feel and believe,” says Gulyas.

For trade shows, Akamai’s marketing arm measures the mass number of raw leads and the qualified leads where there’s opportunity to close the sale. Arthur and her team examine historical and empirical data to see how successful the company’s participation has been in the past. That data helps determine upcoming year support, as well as decisions to go the external trade show or proprietary event route.

The good news is that 45 percent of tech CMOs in the CMO Council survey consistently measure the effectiveness of their event programs against marketing objectives. But 43 percent do not do so consistently and 12 percent don’t do it at all.

The challenge, as Gulyas sees it, is to identify ROI as it relates to generating sales leads and developing new customers. “Today we need better processes in place to help track the metrics and evaluate the exhibition’s value,” she says. “We should not be participating in any event without specific objectives and metrics.”

To that end, she wants show organizers to demonstrate how businesses can maximize their show investment. Data-driven reports and compelling business cases will help DuPont evaluate the value of exhibiting vs. other face-to-face channels. “If show organizers improve their events with changing times and demographics,” she maintains, “companies like ours will experience greater and more immediate payoff.”

ROI: Ping…Pong
In interviews and surveys, CMOs claim well-defined objectives, event strategy and spend rationale are essential to marketing success. Yet show organizers have long argued that too many exhibitors don’t define these for the events in which they participate — and do not share such information.

“I agree that we have not done that work for some shows,” admits GE Infrastructure Security’s Division of Homeland Protection CMO Michael Cavanaugh. “By the same token, most shows are not asking us about strategic objectives” beforehand, just logistics afterward — did the lighting work or were chairs ordered?

The corporate claim that measuring ROI is critical to all decisions loses its potency when only 22 percent of CMOs responding to the RealityCheck survey consider ROI measurement of marketing programs a priority.

DuPont uses several approaches to measure trade show effectiveness. It collects and tracks information from each customer who comes to its booths by asking basic questions to qualify their level of interest. The sales leads are then broken down into categories such as “immediate sales call” for “A” leads; written follow-up for “B” leads; and general interest and follow-up for “C” leads. Some business units enter this information into a database that allows them to track results over time. Most, however, do not track after one year.

“It would be helpful if show organizers identify good examples of show exhibitors who [measure results] successfully,” suggests Gulyas.

Akamai uses soft and hard metrics to track revenue, its target audience and its message from leads to close. Smaller, more intimate events — with industry-relevant conversation and content — always yield better ROI for the company than horizontal ones, says Gulyas.

Indeed, events in “an established space, where we know the players and they know us,” are not the ones most valuable to GE Infrastructure Security’s Division of Homeland Protection. Staff may attend these, but host suites and private meetings instead of exhibiting. “The more controlled the environment, the higher the value because you’re meeting directly with decision-makers,” says Cavanaugh. “At a big event, you may pay for a lot more eyes than actual value.”

That’s why his division places a higher priority in ROI calculations on how many existing customers “we’ve touched or sat with in meetings.” The equation takes into account how much management and salespeople time and travel expenses are saved.

Nortel Networks always compares ROI within the same event type, as well as across event types to determine efficacy and future budget priorities. “In some cases, integrated show packages are great,” says Richardson, “and sometimes they’re not.”

Most show organizers, however, are not aggressively looking at a total solution, which is a key issue for Arthur’s marketing team. “We absolutely believe there is value in custom packages, so we’re out pitching for that kind of approach,” she says.

Unfortunately, event producers are still organized in “pieces and parts,” she adds, requiring her team to manage multiple people within an event company. Marketers want one person — Arthur likens this to an agency or advertising consultant — to represent the show organizer in the CMO office and bring compelling strategic information.

To that end, Akamai used a game developer conference in California very strategically, packaging sponsorships, keynotes, promotions, and pre- and post-event material distribution in advance. “Extremely pleased” with the results, Arthur says Akamai will probably return to that show.

Some show organizers clearly are doing a better job at packaging, says Cavanaugh. One industry organization approached his division, gathered knowledge and returned with a full-year proposal that included sponsorships, booth space and speaking opportunities. When negotiations are complete, he expects the package will garner “a lot more as a percentage of dollars than a booth renewal notice — and considerably more than we spent last year.”

Channel Pressure
The whole issue of multi-channel integration is a troubling one. In recent years, DuPont has become more selective in participating in exhibitions and trade shows, especially in North America. This Fortune 50 company is not alone.

“This shift doesn’t necessarily mean the investment is directed to proprietary events, such as NASCAR, AICHI World Fair or World Safety Congress,” Gulyas explains. “It could be directed to other media, such as e-business, Web seminars and proprietary meetings specifically designed for our customers’ issues.”

A show is only one element of Akamai’s entire outreach, albeit an important one. “How can shows innovate and bring those innovations to me?” she asks. “I don’t see the event/trade show industry keeping pace with business innovation and the desire of attendees to make an event worthwhile.”

She cites speaker slots paid for by vendors but with no content control exercised by show organizers. “Content is front and center for me as a marketer,” says Arthur. “That’s the hook for the audience.” Instead of presenting relevant educational topics, vendors give sales pitches. “The idea is good,” she says, “but the damage is done. Attendees say they’re not getting value.”

Even with these issues, CMOs in the RealityCheck survey will increase event spending in the next 12 months. But spending on direct marketing, advertising, interactive marketing, sales promotion and market research will outstrip events. And e-mail marketing has risen to become the most popular marketing technique, with more than 70 percent of respondents currently using or planning to use it during the next six months.

Richardson specifically cites public relations and positive media coverage as critical in establishing trust among customers today, in a global environment evidencing far less trust than 20, 10 or even five years ago. Plus, the Web lets companies extend their relationships with customers in “personal and relevant ways,” he notes, exactly when they’re most receptive to such information.

Events also compete with market research for dollars, so it’s “huge” if show organizers can provide strategic data, adds Cavanaugh. This is especially critical for the bigger-ticket equipment his division showcases at events. These require a more complicated and sophisticated sales process, and primary feedback on aided and unaided awareness is highly prized. ROI comes into play here, too: What would research obtained through a show organizer have cost if outsourced to a third party? That has to be factored into calculations.

Leverage the best elements of these trends, Richardson urges event organizers. “What happens before and after is just as important” as the event, he says.

Blame the Global Economy
CMOs can only cut the marketing budget pie into so many pieces. Respondents in the RealityCheck survey allocate 9.8 percent to events. That number is 15 percent for GE Infrastructure Security’s Division of Homeland Protection. About one-quarter of DuPont’s annual marketing communication budget may be directed toward trade shows and special events/sponsorships. And Akamai parcels even more to events — 25 to 35 percent of its marketing budget.

But trade show participation must follow strategy. As DuPont grows significantly outside North America, it’s finding that exhibitions and special events work very effectively. The K Show (Europe), for example, and similar shows in Asia draw customers from emerging countries that may have limited resources today, but where DuPont is expanding. “These regional exhibitions are a cost-effective way to reach potential customers quickly, easily and routinely, at least yearly,” Gulyas says. Therefore, DuPont may increase its marketing investment in trade events outside of North America.

In Akamai’s case, its event mix has shifted to 50-50 external events and proprietary events. “Back in 1999 and 2000, when everybody showed up everywhere, [the emphasis was] more external,” she says. “But shows have become so broad and the topics the same that it’s difficult for marketers to rise above the noise. It’s often easier for us in marketing to target our own best-profiled customer prospects with our own event.”

Nortel, too, has increased its number of private events over the few years to an even mix with industry shows. Private events deliver “dedicated time with executive-level customers who tend not to attend many industry events,” says Richardson.

Focus is changing, too. Not only is GE Infrastructure Security’s Division of Homeland Protection shifting dollars from mainstream, big-floor trade shows to corporate-sponsored events, it also expects to spread those dollars over fewer shows.

Akamai events are typically intimate, with a small group of attendees with shared interests. “Trade shows are still marketing events, and while they attract great prospects, we also see a lot of tire kickers,” Arthur says. Proprietary events serve an educational role and delve into more detail with less distraction. They’re shorter and highly focused, with very key takeaways. “And there’s better dialogue,” she adds, “talking ‘with’ people rather than ‘at.’”

Such private face-to-face events, vendor-only conferences and online events represent real challenges to large expositions. “How do they not lose more than they have already lost?” asks Arthur. “With business-to-business more savvy about market segmentation and focusing on targets rather than ‘pray and spray,’ the tipping point is there. That 50 percent we allocate to proprietary events could grow.”

From the CMO perspective, though, the next 12 months look good for events. While 45 percent of CMOs in the RealityCheck survey will maintain their event spending at the same level, 32 percent will increase event dollars, while only 15 percent will cut spending. These CMOs represent large, branded organizations with $7.3 billion in revenues and average marketing budgets of more than $35 million that they estimate will rise 10 percent over the next year.

Q.What key objectives does an event have to fulfill for your company to sign on the dotted line?
A. Richardson: The show “has to align with our marketing objectives, and I have to be confident a strong ROI is in place.”
A. Gulyas: “It’s access to our key customers and potential customers, along with delivering valuable market insights in the seminars offered, that’s important. You can help us by identifying what your audiences are interested in and what your audiences care about today.”
A. Cavanaugh: “Get me primary research from attendees on whether they see my ads or sponsorship while they’re at the show.”

Q.How should show organizers talk with CMOs?
A. Gulyas: “Bring me data-driven, business case metrics in a concise ‘executive summary’ approach.”
A. Richardson: “Promote results and don’t be afraid to share failures. Speak candidly and factually. Don’t inflate results as it impacts the integrity of all the information submitted by the show organizers.”
A. Cavanaugh: “Come back to us at the end of the show and ask about our ROI. Turn this around and tell me how you valued our participation, since you know how much others are spending. Use some creativity in consulting with us.”
A. Lisa Arthur, Akamai Technologies: “I cannot recall someone asking for my time or making that effort. It’s never happened.”

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Tips on marketing to CMOs
Even with their demanding schedules, chief marketing officers (CMOs) do make it to conferences and events. Michael Cavanaugh, CMO of GE Infrastructure Security’s Division of Homeland Protection, attends half a dozen events each year; the division exhibits at about 75.

According to the CMO RealityCheck™ survey by CMO magazine, 57 percent of respondents will attend two or more events in 2005, and 38 percent will go to at least one. The three most important factors in their decision-making bolster the move by many show organizers to strengthen their educational offerings:
1. Conference theme/program topics (85 percent of respondents).
2. Program speakers (52 percent).
3. The ability to network with peers outside the industry (35 percent).

And CMOS find greater benefits in smaller conference formats. Multi-day conferences of 200-plus attendees were the choice of 32 percent of CMOs in this survey. Small executive retreats (under 100) scored for 33 percent. And one-day, seminars of 100 or fewer were cited by 15 percent. Trade shows drew a paltry response of 1.25 percent.

It will continue to be a challenge, though, for show organizers to access the CMO’s calendar. Call it a war for time. “We’re pulled by public commitment, peers in engineering, sales, and finance, and the market of customers, influencers and prospects,” says Lisa Arthur, CMO, Akamai Technologies. “This puts a lot of responsibility on show organizers to come to us with best practices, case studies and meaningful market information to fuel our strategy and achieve a collaboration.”

Link to the CMO Council Survey
www.cmocouncil.org.

Link to the research by the Association of National Adverisers (ANA)/Booz Allen Hamilaton
http://www.ana.net/