The world of marketing is changing, have you reevaluated your relationship with your CMO?
CFOs and CMOs are like the Lennon and McCartney or the Noel and Liam of the Board room. Unique talent, which can form successful partnerships, that far too often ends up with fights, clashes and eventual parting of ways.
But the relationship can be rewarding and pay dividends if handled right for all those involved. What is great is that the relationship has evolved and adapted with the technology that has revolutionised marketing. Never have marketing directors and their financial counterparts had such an opportunity to build shareholder value, top line and bottom line growth by starting to play the same music. Data driven, customer centric brand creation.
Through my career, starting as a Marketing Executive and currently CMO for a number of household names as well as successful startups, I’ve noticed a change in the wind. Whether it was launching Absolute Radio or managing the £80 million content revenue stream of The Guardian or preparing a UK gaming start up for a public listing, one thing has remained constant: the relationship with the CFO has improved over time and I put it down to four things.
1) Data Driven strategies
At the heart of performance and direct to consumer driven marketing is data. Data to test with, data to predict likely outcome and data to measure results. Marketing is now as much about scientists as it is artists. That provides a base for both functions to work from based on fact rather than subjectivity.
2) Marketing ROI
Marketing ROI is now closely linked to the success of the company as the customer experience and marketing initiatives cover the end to end sales cycle, not just, say, advertising. Those FDs who can engage in a constructive debate and understand the nuances of this metric (and the pitfalls) can have a positive impact on it.
3) Greater collaboration
I believe there is a realisation that financial skills are needed for successful marketing and that marketing is needed for a successful business; no matter how big or small the organisation. Plus, in the world we live in now, with a lot of technologies, products, services and business models evolving so fast, a team effort is required in order to succeed. More needs to be done in this area, though. Collaboration also requires trust. Not all marketing can be fact based- instinct, creativity and a certain amount of risk are an essential part of the marketing mix.
4) Digital Transformation
My role as a Freelance CMO is to help organisations transform their business and marketing strategies from point A to point B. This tends to be in organisations that are disruptive, or in industries that need to be disrupted. I genuinely believe that CFOs are increasingly pragmatic to the fact that to be successful you need to be agile and are much more responsive and adaptive than in the old command and control structures.
A brief history in time for the CMO and CFO
My first encounter with an FD was in the mid ’90s, when I started out it revolved purely around cost control and justifying payback on marketing investment over the next 12 months. I was lucky to be in the area of marketing, where at least that was possible. Not expensive above the line campaigns, with dubious research data as KPIs (even to a marketer). I worked in the slightly less glamorous and prestigious end of marketing: CRM and Direct Marketing.
The ATL marketers didn’t really understand it or want to, but at least the FD had some numbers to deal with.
In those days, it was definitely more of a command and control structure . Myself or the Marketing Director would ‘present’ the plans to both CEO and FD. The FD holding the purse strings was 100% accurate.
But it was interesting watching FDs wrestle with the idea of spending millions of pounds on TV advert featuring two kids (Safeways) as a leap of faith. A leap of faith that did payback for a few years.
Nonetheless, there was definitely more of an affinity with classic Direct Marketing, or subscriptions marketing. Basically, anything that at least had a number against it had a response rate that should be achieved. The marketing funnel, putting customers in and getting custom out, is a process and is logical and quite often delivers. As a result, a number of direct marketing managers, like myself, naturally found themselves leading the digital marketing efforts as classic direct marketing moved to digital marketing.
Roll on 2000
As the available data became easier to understand, the relationship improved. As everyone entered this brave new world, the relationship became more collaborative because it had to; no one knew what was happening in a rapidly evolving world. The global crash brought a reliance on cheaper more cost-effective methods of marketing.
2010 + The new dawn
10 years on, as CMO of various entertainment businesses from The Guardian to Virgin Wines, the picture has changed once more- marketing has established itself at the top table. Partly due to the nature of the role, “Customer Experience” and End to End management has been more of a focus.
We have gone even deeper into the data and the majority of marketers are much more numerate. The detailed accountability of programmatic advertising certainly helps in someway to answer the most famous marketing quote in the world:
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
John Wanamaker (1838-1922) was a very successful United States merchant, religious leader, political figure and a pioneering marketer.
The age of AI?
With the increase in AI and automation, a number of marketing and financial processes will alter forever. Despite all the articles entitled “A robot will take over your job” I think the future is incredibly bright as a human and a marketer. I believe that “human empowered automation” has the most chance of succeeding; art, intuition and science combined.
The bottom line, though, is that both functions will, again, need to adapt.
So that brings us up to date. I asked 3 CFO’s in my network what they thought about marketing and their relationship with their CMOs. 3 things came up:
- Lack of understanding.
- Lack of confidence/belief or scepticism.
- Ambiguity of the numbers.
So, despite the progress, we still have some way to go. But it also suggests that as long as marketing is accountable (or perceived to be accountable), then there is less friction- the partnership continues. So, as with all good song writing relationships, you need to get past that difficult second album.
Three things that a CFO can do to improve the effectiveness of marketing and drive the bottom line.
1) Keep improving those marketing language skills.
This is more than just being able to ask “What’s the ROI?”, it is about understanding the complexities of the marketing sales funnel now that social and content marketing play such an important role. It is not as simple as I advertise via channel x and it now produces a result. An average person making a purchase on a holiday takes 27 days, visits 7 touch points and 4 price comparison sites. Deciding which channels contribute towards marketing success in what proportion is difficult.
2) Appoint a performance marketing expert or champion.
Many organisations have this in place and the first requirement is a logical and numerate mind. This can easily be someone out of the finance team and helps bridge the cultural divide and challenge both camps.
3) Customer segmentation is a secret weapon.
Finding the niches to define the customers with the best potential, or finding the customer segment that represents a disproportionate share of the value , is a skill; but one that pays back dividends. This should be co-sponsored to achieve the best results. If it is not part of a strategic marketing plan it can be put in place inexpensively and cheaply. It does not require a great agency investment. Feel free to email to ask how!
The companies that act late tend to lose out. That’s not always the case, but the CMO should be used as the eyes and ears of the organisations to identify trends, sweet spots and consumer trends. I’ve found that in my role I am increasingly asked to look at revenue opportunities and margin generating initiatives. That’s not possible without the CFO onside. Increasingly more a song writing duo than I could ever have imagined 20 years ago. Just as we saw the roles of CTO and CMO combine, maybe Finance and Marketing will be the next super group?