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Looking For A New CMO? Try Finance

Marketing's reliance on data means the skills required are shifting

21Apr

In 2015, Twitter’s board placed CFO Anthony Noto in charge of its marketing team. It was a decision that raised eyebrows, to say the least. Writing in Forbes at the time, Kimberly A. Whitler wrote that the ’move signals that Twitter doesn’t understand marketing, doesn’t understand the different ways to design and staff it to drive better results, and has made a potentially flawed decision as a result.’ One agency exec was even harsher, arguing that in any company, ‘when finance people take over marketing, it means they're in trouble, it means they're getting desperate. They've given up on the power of creativity and marketing to drive their bottom line.’

Twitter has since appointed a CMO with a marketing background in Leslie Berlin, who previously headed up global advertising, marketing, and digital partnerships at American Express. It may be that, as many suspect, Noto was merely an interim appointment. However, this does not detract from the fact that Twitter felt it was a viable move to plump for him over a specialist, even in the interim. And they are not alone in feeling that the two roles are becoming more compatible. There is now a growing trend in organizations whereby finance and marketing are becoming increasingly intertwined - not only in terms of greater collaboration but in people from a finance background crossing the floor into marketing.

CFOs and CMOs have not traditionally been close allies. Indeed, in many ways, their different focuses and backgrounds have meant that they are often in conflict. Finance’s focus is primarily on risk management, efficiency, cost, and so forth. Marketing, on the other hand, Whitler notes, ‘tends to focus on converting insight about the external environment (consumers, competitors, channel partners, etc.) into mechanisms for topline growth.’ This has changed in recent years, though, as marketers have begun to rely more on data to drive their campaigns. In the February 2016 edition of a biennial survey of Chief Marketing Officers, 66% said they planned to increase analytics spending over the next three years. However, marketers are still too often failing to use the wealth of data at their disposal properly. In the annual Duke CMO Survey, 65% of respondents said that they lack the ability to really measure marketing impact accurately. This is where they can use finance professionals, who are usually, by the nature of their role, far more experienced in data analysis.

Another reason for the increased need for collaboration between the two departments is the amount now being spent by marketing. According to Gartner’s 2016-2017 CMO Spend Survey, CMOs are planning to allocate a record-breaking 12% of company revenue to marketing this year. Given this increase, marketing investments are under greater scrutiny than ever, with CMOs being held more accountable than ever before. The CFO needs to understand where the ROI from this spend is coming from, or it is likely that they will force through budget cuts, as opposed to budget increases. The CMO must explain that ROI is rarely, if ever, immediate and that much of it may not be seen for years. The CFO can also help the CMO to best determine where to spend their budget and pinpoint the efforts that are having the most impact. They can help pinpoint the best metrics to gauge success and by keeping control of the data, rather than having marketing essentially mark their own homework, which can lead to selective vanity metrics that do little but puff up marketers’ egos.

Many marketers are recognizing this, and finance too is starting to understand that they can benefit from working with marketing. In a recent Forrester survey commissioned by Neustar of 190 marketing and finance decision makers, over three out of four respondents said it was critically important or very important for marketing and finance to be aligned on business objectives, including revenue growth and profit margins. In his recent presentation at FP&A Innovation London, Rich Carvell, CMO of Office Depot, recounted his experience at Viking. He established a trading group with incorporated members from marketing, BI, merchandising, commerce, and - most importantly, FP&A. A major problem the company, and many others, have that holds marketing back is that data is siloed into individual departments, with no 360 degree view. He decided to give FP&A ownership of all the performance data, thereby breaking down the silos. Secondly, it enabled the marketing team to stop looking at descriptive analytics and left them free to provide prescriptive analytics that really makes full use of their skill set.

Bringing together marketing and finance is not easy, but it is highly beneficial to both and the departments have much to learn from one another. Marketers need to bring finance into the planning and budgeting process and be transparent with what money is being spent and whether the ROI will be seen. If they start to gain trust in your projections, they will give you the opportunity to test and try much more. Finance likes predictability, so set expectations of what success looks like, then update as progress is made or as changes happen. A/B and multivariate testing will also enable CMOs to get a better picture of whether marketing activities is going to be valuable. CFOs cannot just sit back and wait for an invite though, they need to take the bull by the horns and grasp control of marketing analytics. Kevin Keller, a marketing professor at Dartmouth's Tuck School of Business, said of Noto’s appointment, ‘Marketing is just not something a CFO is trained in. They don't have the instincts or experiences. You need someone to inspire and lead people and do the right kinds of things to build incredible brands and customer loyalty.’ In today’s digital economy, data is everything, and marketers need help from finance to use it. While the roles are not exactly interchangeable yet, the skillset required for marketing is changing, moving towards those traditionally required from finance professionals. Marketing and finance need to work closely together and learn from one another to fill gaps in knowledge. A strong finance-marketing relationship can mean the difference between high-growth organizations, and those that stagnate or are left behind.

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