Jump-Start Marketing Accountability: Three Ideas for Giving CFOs and CMOs Something Better in Common
We're five or so years into the "Era of Accountability," and what do we have to show for it? Is marketing any closer to demonstrating to CEOs and CFOs what they're getting for their money? Are we marketers more comfortable in our own skins, confident of our ability to measure and improve the effectiveness of our strategies and programs?
Unfortunately, the answers to all these questions are not what we'd expect, considering that accountability has been at the top of the vast majority of marketers' to-do lists for as long as it has.
According to a recent study from Marketing Management Analytics and Financial Executives International, barely 7% of financial execs feel satisfied with their company's ability to measure marketing return on investment (ROI).
Two studies released at the Association of National Advertiser's (ANA's) Marketing Accountability Conference found that the majority of financial executives don't believe the ROI numbers or forecasts coming from Marketing:
- Nine out of 10 said they don't use ROI metrics to set marketing budgets in the annual budgeting cycle.
- Seven out of 10 said their companies don't use marketing inputs and forecasts in financial guidance to Wall Street or public disclosures.
- Six out of 10 said their companies' marketing departments have an inadequate understanding of financial controls.
- A surprising four out of 10 said marketing forecasts made inside their company can't pass the muster of a standard corporate audit. Finance isn't the only department that is skeptical of Marketing's accountability efforts.
According to the 2008 Marketing ROI & Measurement Study from the Lenskold Group and MarketingProfs, we don't believe our numbers, either! A scant 17% of marketers said their company's ability to measure the financial return generated from marketing investments is "a source of real leadership" and "as good as it needs to be."
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Comments
I have found that many CEOs manage cash, but they don't have a strategic view of just how cash is generated in the short term and how sources of future cash flow are identified. The more the CFO is focused on business strategy, the more likely they are to park financial analysts in the Markeing Department. But if our CFO is unenlighted about business strategy, we have to park out in the Finance Department.
We agree with Kevin and Peter here. Frankly, too many CMOs - and marketing departments - rely on the right side of their brains at the expense of the left. It's a hard balance to strike, but more more needs to be done to align marketing and finance. As alluded to here, we recommend that CMOs actually involve CFOs in the early development of their marketing plans. Indeed, when they are involved in forecasting, they can be valuable allies in managing expectations throughout the fiscal year.
Elizabeth Smith
Associate Editior, The CMO Journal
www.ChiefMarketingOfficer.com