Insights from the Global Chief Marketing Officer Study ~ A North America Perspective Nanci Knight IBM Academic Initiative Relationship Manager | West Region

© 2012 IBM Corporation2 The 2011 Global CMO Study is part of our C-suite Study series encompassing interviews with more than 15,000 C-suite executives ’04-’05’08-’09’06-’07’10-’11 CSCO CEO CFO CHRO CMO CIO

© 2012 IBM Corporation3 In this largest sample of face-to-face CMO interviews, we spoke with more than 1,700 CMOs worldwide, 300 in North America 16% Communications 36% Distribution 24% Financial Services 21% Industrial 3% Public 44% Growth markets 17% North America 35% Europe 4% Japan SectorsRegions The study represents organizations in 64 countries and 19 industries Growth Markets include Latin America, Central and Eastern Europe, Middle East and Africa and Asia Pacific (excluding Japan); n=1734 North America sample size n = 300, Rest of World n = % Global CMOs 11% Regional CMOs 14% Country CMOs 10% BU CMOs North AmericaRest of the World 33% Global CMOs 14% Regional CMOs 46% Country CMOs 8% BU CMOs

© 2012 IBM Corporation4  Globalization has brought the world to everyone’s backyard  Everyone is a broadcaster, publisher and a critic: there is nowhere to hide  Transparency is the new price of entry  Do more than ever, inside and outside the organization  Be more accountable for return on investment (ROI)  Use tools and technologies that their children understand better than they do North America CMOs: swimming, treading water or drowning? In this digital era...CMOs have to... And... CMOs have just two to three years to make their mark And... more data, more sources, more devices, less clarity “The role went from marketing, to marketing and client experience, to marketing and client experience and channel. And now I am also doing technology prioritization and all of our service model structure. It really has turned into a revenue officer role, versus a marketing officer role.” Banking EVP & CMO USA

© 2012 IBM Corporation5 “None of the changes in Marketing today are evolutionary, they are all revolutionary and transformational.” Insurance SVP of Marketing, USA “I think the biggest marketing challenge will be the analysis and diffusion of data. I firmly believe CMOs and marketers need to become ‘analytic athletes’ to do their jobs.” Maureen Schumacher, Southeast Regional Director, Google “Really good marketing has always been about creating a brand promise and delivering on it. It is just that with today's tools and technology, more people are watching.” Industrial Products SVP Marketing, USA “Traditionally, corporate culture and character have been managed by HR, but it can't remain there in a digital environment. The world of separate internal and external messages is gone, and internal actions, memos and decisions can impact your brand just as much as an advertising campaign.” Financial Markets EVP, Head of Global Marketing, USA “I'd like to get less data and more information.” Telco VP, Canada

© 2012 IBM Corporation The key areas of under-preparedness are the same areas CMOs identify as most critical to enabling the marketing agenda Financial constraints Decreasing brand loyalty Growth market opportunities ROI accountability Customer collaboration and influence Privacy considerations Global outsourcing Regulatory considerations Corporate transparency Data explosion 1 Social media 2 Growth of channel and device choices 3 Shifting consumer demographics 4 Mean Marketing Priority Matrix Source:Q7 Which of the following market factors will have the most impact on your marketing organization over the next 3 to 5 years? n1=1733; Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? n2=149 to 1141 (n2 = number of respondents who selected the factor as important in Q7) Factors impacting marketing Percent of CMOs selecting as “Top five factors” Under-preparedness Percent of CMOs reporting under preparedness

© 2012 IBM Corporation7 Being a CMO in North America is 1.6 times more complex than the global average Expected level of complexity and preparedness to handle Percent of North America CMOs responding Feel prepared for expected complexity 35% Expect high/very high level of complexity over 5 years 84% 49% complexity gap 31% complexity gap Feel prepared for expected complexity 48% Expect high/very high level of complexity over 5 years 79% North AmericaGlobal  Simultaneous investment in traditional and emerging capabilities  Marketing and technology alignment more challenging  Managing the skills mix Key Drivers Source:Q4 How much complexity will your organization have to master over the next 3 to 5 years compared to today? n=1709; Q6 How prepared do you feel for the expected complexity ahead? n= x more complex

© 2012 IBM Corporation8 North America CMOs are simultaneously investing in emerging and foundational capabilities; well beyond the global averages Predictive Analytics 75% 66% North America Global 87% 80% 87% 82% 73% 68% 75% 72% Mobile Apps Social Media Collaboration Tools Tablet Apps 67% 56% Scorecards Dashboards Plans to increase the use of technology Percent of CMOs selecting technologies Emerging CapabilitiesFoundational Capabilities 82% 73% Content Mgmt. 77% 70% Single view of customer 87% 81% Customer Analytics 63% 61% Campaign Mgmt. Source:Q22 Do you plan to decrease or increase the use of the following technologies over the next 3 to 5 years? n=259 to 264 9%3%11%2%

© 2012 IBM Corporation9 Within North America, CMO alignment with their technology organizations varies with the geographic scope of their role Lack of IT integration with rest of company Lack of marketing and IT alignment After cost, the top barriers preventing technology adoption “The biggest issue is prioritization and funding. IT funds most technology projects but if the technology is only marketing specific then it may need to be funded by Marketing.” Insurance Marketing VP, Canada Source:Q23 What are the top 5 barriers to using technology? n= x 2.1x 10% BU CMOs North America 14% Country CMOs 11% Regional CMOs 65% Global CMOs

© 2012 IBM Corporation10 50% North America CMOs have a strong desire to drive the required changes in order to activate their corporate character North America Top 5 initiatives driven by transparency Percent of CMOs selecting initiatives Source:Q9 To what extent does transparency create a need for you to: n=293 to 297 Enhance engagement with customers and citizens Manage brand reputation within and beyond the company Expand data collection, analysis and insights capabilities Strengthen collaboration across the enterprise Orchestrate a single view of the brand 80% 78% 72% 64% Global 75% 74% 67% 64% 61% Pink – out performing organizations, Blue - underperformers.

© 2012 IBM Corporation11 Globally, to deal with the broad level of under-preparedness, CMOs signaled three key domains of improvement Deliver value to empowered customers Foster lasting connections Capture value, measure results “Marketing must become more adept at managing the magnitude of change now taking place. Otherwise, it will be like going into battle with a Swiss Army knife.” Financial Services Vice President, Marketing, USA

© 2012 IBM Corporation12 North America CMOs have a unique opportunity to lead by addressing under-preparedness and closing the complexity gap Requires a balance of external customer feedback and experience based insights to drive decisions Utilizes customer analytics is a way to get better prepared Engages with customers as a critical driver to better articulate corporate character Addressing Under-preparedness Rethinking the skill mix as the primary driver to close gap supported next by investment in technology and integrating insights Investing simultaneously in both emerging tools and technologies and traditional campaign management, scorecards and dashboards Closing the Complexity Gap

© 2012 IBM Corporation13 Rethinking the skills mix, not technology alone, will help North America CMOs address the challenges Source:Q8 How prepared are you to manage the impact of the top 5 market factors that will have the most impact on your marketing organization over the next 3 to 5 years? n=149 to 1141; Q20 To what extent will the opportunity to collect unprecedented amounts of data require you to change? n=1629 to 1673 Global CMOs: Invest in technology Understand analytics Collaborate with peers Validate ROI Address privacy Integrate insights Rethink skill mix 73% 69% 65% 64% 52% 49% 28% North America Regional CMOs: Rethink skill mix Understand analytics Collaborate with peers Validate ROI Address privacy Integrate insights 77% of North American CMOs put the “Data Explosion” at the top in terms of under-preparedness. Here is how they plan to be better prepared as compared to Global CMOs: Invest in technology

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© 2012 IBM Corporation18 North Central 1 North Central 1 Valinda Kennedy Central Central Jerry Haan North East 1 North East 1 Bob Bry s.ibm.com s.ibm.com South Central/East South Central/East Dennis Bly West West Nanci Knight m m AZ AR CA CT FL GA IA IL IN KS KY MD MI MN MO NC NE NH NJ NY OH OK PA SC TN TX UT VA WA WI WV Mid-Atlantic Penelope Gardner DC ID LA CO WY MT NM NV SD ND MS AL ME OR North Central 2 Mary Lyons North East 2 Rick McKean IBM Academic Initiative ~ Relationship Managers MA VT

© 2012 IBM Corporation19 Through these in-depth discussions, we are better able to understand the evolving role and function of the CMO in the C-suite Marketing in the Digital Era  Deliver value to empowered customers  Foster lasting connections  Capture value, measure results  Sample consists of private sector CMOs (97%) and public sector leaders (3%)  Representative sample across 64 nations and 19 industries  Private sector organizations with revenue more than US$500 million in mature markets and more than US$250 million in growth markets; public sector organizations with more than 1,000 employees Scope  Face-to-face one hour interviews with 1,734 CMOs  Facilitated using structured questionnaire  Wide coverage: from highly profiled organizations (48 of the 100 top Interbrand organizations) to lower profile local organizations Approach  Statistical analysis of 35 questions and the related 236 discrete factors  In-depth analysis based on self-reported performance characteristics for differences between “outperformers” and “underperformers”  Comprehensive review and analysis of more than 10,000 interview quotes Analysis Note:Outperformers and underperformers were identified by answers to questions about their organization’s competitive position. Those who selected “significantly outperform industry peers” were identified as outperformers; those who selected “somewhat or significantly underperform industry peers” were grouped as underperformers.