In times of economic uncertainty, more than ever, businesses heavily scrutinize every dollar spent on marketing. And rightly so. I’ve seen this firsthand, and I’ve heard it from other CMOs around the world. This exacerbates an age-old truth of the C-suite: there exists tension between the CMO and CFO.
This tension has been around for a very long time.
In fact, it's been more than a century since industrialist William Hesketh Lever allegedly said: "Half my advertising spend is wasted; the trouble is, I don't know which half." This is absolute blasphemy for a CFO! And, frankly, it should be unthinkable for a modern marketer, as well.
Sometimes, marketers hide behind such sentiments, as they believe keeping their spending close to the vest will protect them from scrutiny or budget cuts. This breeds suspicion about marketing, and a historic perception among CFOs that marketing is a cost center with unproven returns.
I believe that misperceptions like these undermine the function of marketing and hinder both investment and innovation. That’s why I brought my CFO to the Cannes Lions International Festival of Creativity.
Although many CMOs would never consider bringing a finance lead, especially a CFO, to an event like the Cannes Lions, I was happy to share the stage. It allowed us to showcase, together, what we’ve learned over the years about bridging our departmental differences.
Clear communication
It’s not funny, but it’s true: Many CFOs view marketing as a black hole, something that you throw money into and then can’t see a return on the other side. While I might enjoy the wonders of the universe, this is an analogy that rankles me.
The disconnect between CFOs and CMOs is partially a result of how we communicate, but also what we communicate. For too long, marketers and finance people have talked past each other, each communicating what they want without truly listening.
Marketers tend to talk about reach, impressions, click-through rates, frequency, brand awareness, pre-disposition scores, funnel leakages… and there’s a lot of value in those metrics for marketers. But none of those measures means anything to a person in finance who is focused on dollars and cents. When a CFO asks what the business results are, the CMOs answers have to be in business terms, not marketing jargon.
To build trust and mutual respect, marketers need to speak with finance teams in ways they understand. As marketers, doing this should be second nature. It’s our job to understand our audience and tailor our external messaging appropriately — but we need to do it internally, as well. It is the duty of the CMO to connect the dots between marketing actions and business outcomes, credibly.
In practice, it all comes down to numbers. In my experience, you have to measure everything. Yes, everything. And showcase the value of what you’re doing with data that highlights marketing’s impact to the business.
Effective collaboration
According to Ernst & Young, 83 percent of people surveyed say their company’s marketing activities would be more effective if marketing and finance were more closely aligned. That’s more than four out of every five people!
In my experience, the only true way to ensure alignment within an organization is to make it part of the organization's operating model. At Mastercard, we’ve installed a marketing CFO who reports into both me and the company CFO, ensuring a cohesion and understanding between all parties.
In this model, the marketing CFO walks the company CFO through marketing’s rationale for investment asks and can thoroughly answer questions regarding ROI. It helps develop transparency, credibility and trust. It also helps us in to make smarter decisions that drive greater efficiencies and impact.
The marketing CFO, along with his team, saves everybody time and stress and provides a consistent stream of communication between marketing and finance that results in alignment, unbiased opinion — and most importantly — mutual trust.
Operating with clarity
It’s a CMO’s job to prove the value of marketing. Openly, transparently, frequently.
In today’s data-driven era, there is no real excuse for marketers not to produce more robust and precise ROI measurements. It’s our job to reach out, walk finance through these techniques and bring them up to speed. Metrics and measures should be in place that give CFOs everything they are looking for to prove marketing effectiveness.
If you are able to build out the right systems, the marketing and finance organizations can even utilize the same metrics to inform their decision-making.
Marketing today and into the future
Typically, companies have three areas where the most money is spent: people and infrastructure, technology, and marketing. When revenues fall short in any financial reporting cycle, cutting money from the first two categories is more difficult, and Marketing offers the path of least resistance and with a relative ease of execution. I wish it weren’t so, but it is a reality nonetheless! Instead of being possessive about marketing dollars, CMOs have to put themselves in the CFO’s shoes. Do you want to be territorial and hide your marketing dollars and go in front of the analysts and report missed earnings or rise to the challenge and be team players and bite the pill?
As a c-suite member, you are not just representing your function, but you should be thinking about your company holistically. You put territories and turf dynamics aside and put your shoulder to the company’s wheel. While painful in the short-term, operating this way produces real long-term benefits. The CEO and CFO would reciprocate, when it is their turn to support marketing. You need to educate them on the clear downsides of cutting back on marketing investment during crisis – actually, it is the most opportune moment to invest. With right credibility and trust built, you get the desired outcomes. I have seen it work like a charm, over decades, across geographies, industries and companies.
When we work as a team to establish trust, we develop happy tension and can break through any issue we encounter. Instead of tension that threatens shared goals, happy tension builds the brand, grows the business, and creates a competitive advantage. And after seeing this framework in action these past few years, I’m very excited about what the future holds!
