Was Starbucks right to eliminate its CMO role?

There are also plans to recruit a global chief brand officer who will report to chief executive officer Laxman Narasimhan, who said the restructure was a way to “realign the organization to balance clear geographical focus with investing in functional capabilities to scale around the world, generating productivity and reinvigorating our partner culture.”

The Starbucks restructure is part of a wider trend that has seen the chief marketing officer role disappear. It follows the recent move by UPS, which brought its marketing function under the helm of a chief commercial and strategy officer, and brands like Lyft, which separated its CMO title into two VP roles, and Uber, which replaced its CMO with a VP.

Unlike businesses that have removed their top marketing role, Ewan McIntyre, who is chief of research, vice-president and analyst at Gartner Marketing Practice, believes the Starbucks story is a positive one.

“Having the CEO as a former CMO is a net positive thing for the business. It indicates a mature organization that understands the importance of marketing. It is an indication of how seriously Starbucks thinks about customers and how important marketing is to Starbucks.”

McIntyre, who regularly consults businesses on their marketing structure, sees the news as less of a relegation of marketing and more of an experiment in reorganizing marketing into regions.

“There has been a lot of narrative over the last few years about the death of the CMO, but I don’t think it’s that. In this instance, we are talking about an organizational realignment.”

Simon Basset is chief executive officer at the marketing headhunting firm TML Partners. He says: “If you’ve got an organization like Starbucks that has elevated the role, then that’s fantastic. That drives the strategic importance of marketing in the boardroom.”

The progression of CMO to CEO is more common in the US than in the UK, but even where there are examples of these promotions, they are still rare occurrences.

Basset forecasts that there will be an increase in the CMO turned CEO in the next decade. “How many CMOs end up in the Fortune 500 list is the best litmus test of how strategically relevant marketing is going to be in the board room.” Right now, though, he says, the figure is still far too low.

The future of the CMO title is not a new conversation. During Basset’s more than 20-year career, he has witnessed the title change to suit what is “in vogue.” Often, the elimination of the CMO title ends with the marketer being folded into roles such as chief administrative, customer, commercial or growth officer.

Marcus Collins, a professor of marketing at the University of Michigan, says he “appreciates” the promotion of a senior marketer to the chief exec position but ultimately believes it “undermines” the role of the CMO.

“In my view, Brewer’s promotion is more of an acknowledgment of his talent than it is an acknowledgment of marketing’s contribution to the C-suite. Otherwise, why eliminate the role?”

That said, Collins thinks it’s “critical” that the CEO has “marketing savviness,” especially within a company like Starbucks where its marketing is “vital” to its business. “Marketing is the act of going to market; without a keen understanding of this exercise, how could one do this effectively?”

Unsuccessful marketing will harm sales, says Starbucks

In its 2023 full-year earnings report, under the subheading ‘Risks Related to Brand Relevance and Brand Execution,’ Starbucks acknowledged the importance of marketing in generating sales. It said: “Our success depends in part on whether the allocation of our advertising, promotional and marketing resources across different channels, including digital, allows us to reach consumers effectively and efficiently and in ways that are meaningful to them. If the advertising, promotional and marketing programs or our pricing strategies are not successful or are not as successful as those of our competitors, our sales and market share could decrease.”

This statement then feels at odds with a business that has done away with its CMO.

Mike Proulx, who is vice-president and research director at the market analyst firm Forrester, says Brewer’s promotion “further underscores the notion that CMOs who act as broad business leaders have a path to the CEO job.” While it is good news for Brewer, Proulx is less optimistic about the way the statement referred to ‘marketing support.’ “It implies that marketing isn’t seen by top leadership as a strategic, business-driving function.”

Proulx doesn’t see a problem with Starbucks organizing marketing regionally, but he says: “There absolutely needs to be visibility and accountability for marketing at the very top of the organization.”

The chief executive officer of the marketing analyst group Strat7, Barrie Brien, adds the elevation of Brewer in a company like Starbucks could set a trend that other brands might follow. “Placing a CMO at the helm is a forward-thinking move. As such, we’ll likely see more CMOs make the move to CEO to steer the overarching vision.”

He adds that this shift in C-suite power would also lead to CEOs, CFOs and CMOs working closely together to “drive transformation around customer centricity.”