External CMO: Why is it a growing trend with Startups and SMEs?
External CMO: Why is it a growing trend with Startups and SMEs?
It’s not new that startups and small to medium-sized enterprises (SMEs) face unique challenges that more established and bigger businesses might not. On top of that, it’s widely agreed that the Covid-19 pandemic years might have made it even more challenging, due to how it completely shook most industries. On the aftermath of that, one of the trends we’ve seen growing strong in the past couple of years is the External and Fractional C-suite positions, with companies trimming down their structure and their core teams to the absolutely essential and relying on external senior experts to fill in the gaps, bringing knowledge, experience and connections to fast track the company’s growth and improve all processes to allow it to scale without the risk of hiring for highly paid too soon.
We’re talking of course about External Chief Marketing Officer (CMO), but also CFO (Finance) or CTO (Technology), positions that are becoming more and more popular.
It’s an innovative solution to the new challenges companies face. This trend is driven by the need for strategic marketing expertise, cost efficiency, and the ability to scale marketing efforts quickly.
Let’s jump into why External CMOs are becoming increasingly popular among startups and SMEs.
What is a CMO and what do they do?
A Chief Marketing Officer (CMO) is a senior executive responsible for overseeing an organization’s marketing strategies and initiatives. The CMO plays a pivotal role in driving business growth by developing and executing comprehensive marketing plans that align with the company’s objectives, usually working very closely with the Chief of Sales and the CEO.
Although this can be a very wide role and different from company to company, here’s what a CMO typically does:
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Strategic Planning: A CMO formulates and leads to the deployment of long-term marketing strategies that align with the overall business goals, ensuring that all marketing efforts support the company’s vision.
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Brand Management: They are responsible for building and maintaining a strong brand image, ensuring consistent messaging across all marketing channels.
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Market Research & Competitive Analysis: Conducting market research to identify trends, customer needs, and competitive landscape, allowing the company to stay ahead of market changes.
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Campaign Management: Overseeing the creation and execution of marketing campaigns that drive awareness, engagement, and conversions, across all existing marketing channels, both online and offline.
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Team Leadership: Leading the marketing team, fostering a culture of creativity and performance, and ensuring all team members are aligned with the strategic goals, as well as liaising with other business units.
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Performance Metrics: Establishing key performance indicators (KPIs) and analyzing marketing data to measure the effectiveness of marketing strategies and initiatives, continuously defining the targets the business should achieve.
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Customer Relationship Management: Developing and implementing strategies to improve customer engagement and retention, including setting up new tools and systems to support nurturing and marketing automation.
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Budget Management: Allocating and managing the marketing budget to ensure efficient use of resources and maximum ROI.
Why opting for an External CMO?
The need for strategic Marketing expertise
Startups and SMEs often lack the internal resources to develop and execute comprehensive marketing strategies. as their teams are small and budget is always tight. According to a report by Gartner, 33% of senior marketers struggle, for example, to connect data across sources, highlighting the complexity of modern marketing and the need for external inputs to keep companies up to speed. An External CMO brings a wealth of experience and knowledge, helping businesses navigate these complexities and develop strategies that align with their business goals. This kind of knowledge would be hard to find internally or very expensive to hire full-time.
Expertise → Cost Efficiency → Flexibility → Scalability
Cost efficiency
Hiring a full-time CMO can be a significant financial burden for startups and SMEs. A fractional or External CMO offers a cost-effective alternative, providing high-level expertise on flexible terms. This approach allows businesses to access top-tier marketing talent without the overhead of a permanent executive position.
A fractional CMO can drive growth without the cost of a full-time CMO and the terms of the agreement can be adjusted based on the stage of the company and the month on month needs, making it better and more flexible financially, almost like a “pay for what you get”.
Scalability and flexibility
Startups and SMEs often experience rapid growth phases, sometimes unexpected, that require scalable marketing solutions. An External CMO can be called in and quickly adapt to changing business needs, providing tailored marketing strategies that support growth. This flexibility is crucial for businesses looking to expand their market presence or launch new products and services, needing for solid experience and guidance to move fast.
The role of technology
Technology plays a crucial role in modern marketing, and External CMOs are well-versed in leveraging the latest tools and platforms. According to GfK, 45% of marketers already use AI, and 40% are familiar with or using machine learning models, which still leaves the majority behind in terms of the latest technologies available for Marketing teams.
An External CMO can help businesses integrate these technologies into their marketing strategies, liaising with all the different providers, enhancing efficiency and effectiveness.
You can read more about how an External CMO can be beneficial to your business here.
Differences between CMO and External CMO
CMO (Chief Marketing Officer)
Pros:
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Full-time presence: A CMO is fully integrated into the company, dedicating their full attention to the business’s marketing needs.
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Deep company knowledge: Being an in-house executive, likely already in the company for a significant time, a CMO develops an in-depth understanding of the company’s culture, products, and team dynamics.
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Consistent strategy: A CMO provides ongoing strategic direction and leadership, ensuring continuity in marketing efforts, knowing exactly what worked in the past and what didn’t.
Cons:
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High cost: Hiring a full-time CMO is a significant financial investment, including salary, benefits, and other compensation packages, which might not be reasonable for a company on its scaling stage or struggling to grow.
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Limited flexibility: A CMO is a long-term commitment, which can be challenging for smaller businesses with fluctuating needs, particularly when things don’t work out as expected and firing can be even more expensive.
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Time-intensive hiring process: Finding the right CMO can be a lengthy and complex process as not everyone has what it takes for such pivotal role for the short and long term success of the business.
External CMO
Pros:
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Cost-effective: An External CMO provides high-level expertise on a flexible, retainer basis, saving on the costs associated with a full-time hire, including when things don’t work out.
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Flexibility: They offer scalable services that can adapt to the changing needs of the business.
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Diverse experience: External CMOs often bring a broad range of experience from working with multiple industries and companies, offering fresh perspectives and innovative ideas, particularly helpful when companies feel stagnated.
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Quick implementation: They can be brought on board quickly to address immediate marketing challenges (and let go just as quick if needed).
Cons:
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Limited integration: As they are not full-time employees, External CMOs may not be as deeply integrated into the company’s culture and day-to-day operations.
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Potential lack of continuity: They may not provide the same level of continuous strategic oversight as an in-house CMO.
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Availability: Their time and attention might be (not always) divided among multiple clients, which could impact their availability for your business.
Deep company knowledge but high cost
vs
diverse experience and cost efficiency but limited integration
Is it a trend?
Yes, there is evidence that hiring External CMOs is a growing trend. According to a report by Bain & Company, there has been a significant increase in the number of external specialist roles, including those focused on Marketing and Artificial Intelligence, which collectively increased by 61% from 2020 to 2024. This trend indicates that companies are seeking specialized expertise that may not be available internally.
Additionally, a survey by BCG, highlighted on their article on how CMOs can lead transformations in an era of change found that 56% of marketing organizations entered the year with expectations of spending cuts, leading companies to seek external support to fill specialised needs and achieve scale. This highlights the growing reliance on external partners to navigate budget constraints and talent shortages.
According to BCG, the decision on where a function sits (internally or with an external specialist) “comes down to three factors: how large a team is, how closely it works with the core marketing function, and how incentives are aligned.”
Other relevant articles and research on this:
- The rise of Fractional CMOs: According to a report by Geisheker, the adoption of fractional CMOs is expanding faster than anticipated. This trend is driven by the increasing complexity of digital, data-driven marketing landscapes and the need for immediate, measurable marketing impact.
- Decreasing CMO tenure: A study by Russell Reynolds found that the median tenure for CMOs has decreased from 43 to 35 months between 2020 and 2022. This shorter tenure suggests that companies are seeking more flexible and specialised marketing leadership options.
- Skill gaps and technological advancements: Korn Ferry reports that 36% of CEOs cite skill gaps in keeping pace with disruptive technologies as a reason for replacing CMOs. This indicates a growing need for external expertise to address these gaps.
- Marketing ROI Pressure: According to the ANA, 61% of CMOs feel less secure in their jobs due to pressure to demonstrate marketing’s revenue impact. This pressure is leading companies to seek external support to achieve better ROI1.
These statistics underscore the increasing trend of hiring External CMOs to address the evolving complexities of modern marketing and the need for specialised skills, across all types of industries.
Circumstances and current market reasons for hiring an External CMO
The decision to hire an External CMO is often driven by several market circumstances and trends on today’s economy:
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Economic uncertainty: In times of economic uncertainty, businesses may be hesitant to commit to the high costs associated with a full-time CMO. An External CMO provides a cost-effective solution without the long-term financial commitment.
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Rapid technological advancements: The marketing landscape is constantly evolving with new technologies and platforms. An External CMO can bring the latest industry knowledge and expertise, faster than internal resources can, helping businesses stay competitive.
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Specialised skill requirements: Modern marketing requires a diverse set of skills, including digital marketing, data analytics, and content creation. An External CMO can provide specialised expertise that may not be available internally.
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Scalability needs: Startups and SMEs often experience fluctuating growth rates. An External CMO offers the flexibility to scale marketing efforts up or down based on business needs, being a better solution in terms of costs.
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Focus on core business functions: By outsourcing marketing leadership, businesses can focus on their core operations while still benefiting from high-level marketing strategies and execution.
Case scenarios
We now know everything there is to know about internal and external CMOs, so let’s start wrapping up into actual decisions on when’s best to go for, based on your context and what you want to achieve.
Conclusion
The trend of hiring External CMOs is driven by the need for strategic marketing expertise, cost efficiency, scalability, and flexibility and it’s a great idea for business with high ambitions but limited resources.
Startups and SMEs can benefit greatly from the experience and knowledge of an External CMO, enabling them to navigate the complexities of modern marketing and achieve their business goals with a fraction of the costs.
As the challenges increase for these companies, the role of the External CMO will become increasingly vital for driving growth and success.
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