McKinsey: CMOs and CFOs must join forces to solve the marketing technology ROI gap – with the help of AI

Email marketing tools, customer data and automation platforms, social media and campaign management systems are all examples of martech. Their use and composition vary by industry, Robert Tas, a partner at McKinsey & Company, told me. “For example, in financial services, you will find risk compliance tools integrated into marketing,” he noted.

In 2023, the global technology market was worth $131 billion, and is expected to grow at a compound annual growth rate of 13.3% to exceed $215 billion by 2027 — nearly doubling in five years, according to a new McKinsey report. Martech Rewiring: From Cost Center to Growth Engine.

Despite rapid growth, many marketers are still in the early stages of maturity – focused on automating legacy processes and struggling to measure ROI. The findings are based on a survey of more than 200 senior marketing and technology leaders at companies with revenues of more than $500 million, each of whom spend more than $500,000 annually on martech and adtech.

Companies run campaigns and the tools work to some extent, Tas said. But too often, millions are spent without understanding its direct business impact or how newer AI-driven tools can boost performance.

According to TASS, duplication across stacks is rampant. “Companies end up paying twice for tools that serve the same purpose,” he said. Often times, teams lack consensus on which tools to keep or retire.

McKinsey found that most Fortune 500 companies are already using personalization tools, journey optimization tools, and customer decision-making platforms. However, nearly half of market leaders cite stack complexity and poor data integration as key barriers to realizing value – and key barriers to achieving a unified identity strategy.

Another key finding: None of the senior marketing leaders over the age of 50 that McKinsey interviewed could clearly articulate the ROI of their technology investments. Instead of tying results to revenue, customer lifetime value, or business growth, most track operational metrics — email sends, open rates, impressions, and reach.

Many companies also fail to plan and implement training. “Years later, they are still fixing data pipelines and enablement gaps that should have been addressed from the beginning,” Tas said.

Tas added: “What we are not seeing is rationalizing investment in the market from a total cost of ownership perspective, and managing it like a CFO would do.”

Put martech into company-wide strategy

The AI ​​revolution provides a rare second chance, according to McKinsey. With the right approach, companies can reposition martech as a strategic enterprise asset – curated by the C-suite, integrated into business strategy, and supported by governance and skilled talent.

To achieve this, CMOs must advocate for market funding, training and use case development, which elevates the function onto the executive agenda. Many chief marketing officers are more focused on media than technology, and technology budgets often fall under IT rather than marketing, Tas said.

Some marketing managers already link marketing closely to business strategy and financial results. For example, last summer I spoke with AT&T’s Kellen Smith-Kenny, chief marketing and growth officer, and Pascal Desroches, executive vice president and chief financial officer. “In my bones and in my DNA, I always think about how any marketing investment can drive a company’s financial performance.” Kenny said.

“Organizations need to be accountable for their technology investments, just as they would when building a new factory,” Tas said. Financial leaders will play a key role. “You need a CFO and, ideally, a revenue executive to drive the technology transformation that moves the business forward,” he said.

As CFOs take leadership roles in company-wide AI strategies, they can help reshape the Martech stack itself. McKinsey predicts that AI will reshape smart technology stacks by adding an effective orchestration layer that breaks down silos, improves customer experience, and drives growth.

Cheryl Estrada
sheryl.estrada@fortune.com

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There’s a new web browser in town. Tech giant OpenAI unveiled ChatGPT Atlas on Tuesday, a browser that integrates generative AI capabilities throughout the user experience.

OpenAI It was stated in her advertisement: “AI is giving us a rare moment to rethink what it means to use the web. Last year, we added ChatGPT search so users can instantly find timely information online — and it’s quickly become one of our most used features. But your browser is where all your work, tools, and context come together. A browser built with ChatGPT brings us closer to a true super assistant that understands Your world and helps you achieve your goals.

ChatGPT Atlas represents a challenge to Google not only as a web browser but also as a potential replacement for the company’s primary search engine, he wrote luck Technology editor Alexei Oreskovich. “The Atlas Browser home page looks similar to the Google Search home page, except that the box in the middle of the white page is for interacting with the ChatGPT AI bot instead of the Google search engine,” he points out. You can Read more of Oreskovic’s analysis here.​

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