By James Dixon, Chief Digital Officer, Atomic 212°
In a fractured and skeptical market, business success relies on effective collaboration between departments. The perceived divide between CMOs and CFOs is perhaps the most commonly identified issue that can hinder business growth and brand development, but what are the facts?
At the recent Cannes advertising festival, leading B2B marketing agency Transmission discussed the findings of its latest global study in partnership with Savanta to highlight the contrasting perspectives of CMOs and CFOs across various markets. The findings of the study, which surveyed a professional panel of 414 B2B organisations, are frankly dire. It reveals that only 36% of CFOs have complete confidence in their CMOs’ decision-making regarding marketing budgets; a figure likely influenced by the fact that 67% of CMOs struggle to prove the commercial value of brand marketing to the board. According to Transmission, while CMOs placed importance on brand awareness, consideration, and market share, CFOs focused on metrics related to revenue growth, profit margin, and customer retention.
Other important callouts in the study include:
• 42% of CFOs do not believe that the health of their brand has a direct impact on the health of their business.
• 69% of CFOs consider brand marketing as an expense rather than a revenue driver.
• 84% of CFOs believe that B2B buyers do not select suppliers based on their brand.
• 75% of CMOs think the health of their brand has a direct impact on the health of their business, but 67% struggle to prove its commercial value to the board.
The gap between CFO and CMOs’ views certainly underscores the need for better communication and collaboration if CMOs want to secure additional resources, but proving ROI is critical. To place a local lens on the issue, we spoke to 15 leading CFOs in the Australian market with the help of CFO leadership expert and author of CFO of the Future, Alena Bennett, to get an understanding of their priorities and how marketing may or may not factor in. The research reveals a potential silver lining for Australian CMOs and provides insights on how they can effectively communicate with CFOs to bridge the gap.
The CFOs interviewed work across both B2B and B2C. Forty-three per cent of them acknowledged marketing as significant or very significant to achieving the priorities for the business in FY24. What were those priorities? Unsurprisingly, growth was the most common answer, followed by an improved approach to market.
Marketing was, in fact, the third most likely department to be ranked as having the most important role in delivering these priorities when CFOs were asked to rank sales, HR, finance, marketing, IT and others. Sales ranked as the most important, followed by others.
While Transmission has already supplied plenty of useful quantitative figures, what we really wanted to get to the bottom of was the qualitative. It’s all well and good to point out that of 15 CFOs, several actually view marketing as important, but the juicy stuff kicked in when we asked why that was the case – or perhaps more importantly – why it wasn’t.
When asked to nominate the biggest factor in deciding how to allocate corporate budget across functions, 53% of our CFOs gave answers that broadly pertained to financial or strategic outcomes. Specifically, they were looking to “support resources that contribute to current objectives”, find a “return on working capital”, and deliver a “return on investment and alignment with the company’s overall objectives”. On the more pragmatic side, two answers were simply “necessity” and “revenue”.
The one CFO who ranked marketing as “very significant” in achieving their FY24 priorities attributed their answer to needing to “gain larger and more corporate clients” and a “need to ensure our brand and reputation suits this”. They added: “Sales and marketing are the biggest drivers of growth for the business.”
Many marketers would be envious of the CMO who has a CFO with that view, but it provides two very important insights. The first is obvious: CMOs must communicate their budget requests as an investment that drives real growth for the business. And they need to communicate their requests in terms that highlight the clear ROI – move beyond cost for brand health and towards investment in customer acquisition.
Of course, it’s not that simple, but during a session at Cannes presented by The Wall Street Journal, Deloitte Digital’s US Chief Marketing Officer, Mark Singer, gave a succinct explanation. He said CMOs need to stop treating their CFO as a numbers person and more as a business person: they don’t want to talk budgets, they want to talk about business growth and investment opportunities. Understand this and make efforts to earn their trust by speaking this language.
The second insight is the link between sales and marketing. While three CFOs interviewed ranked marketing as the most important role in delivering priorities, seven ranked sales at the top. There is a real opportunity for CMOs to clearly identify how their efforts are linked to supercharging the sales department’s efforts and ultimately provide growth at the bottom line. This was also something Singer was careful to point out, drawing specific attention to the need to unify the messaging of the sales and marketing department, ensuring the two work in lockstep to give an exponential boost to ROI and increase the visibility of marketing’s role as a growth driver in the business.
These insights were echoed by the seven CFOs we spoke to who ranked marketing as “significant” to achieving their FY24 priorities. They claimed marketing is directly linked to the “growth of sales”, helping clients “find solutions that provide efficiencies and cost savings”, and “deciding which events and customer promotions can assist in meeting top line figures”. It’s not surprising then, that compared to the eight CFOs who ranked marketing as very significant or significant, seven of our fifteen CFOs believe the CMO or marketing department have set a clear budget and clear ROI in line with business priorities.
What about the CFOs who didn’t see marketing as significant? Their views were split almost evenly between two camps: those who said their marketing efforts could improve – indicating an openness to new initiatives that can deliver growth – and those who believed their marketing efforts had already reached their ceiling. Those in the second camp drew this conclusion from either a perceived lack of relevance to some consumer segments or, in one CFO’s words: “Marketing has already laid the groundwork. Now it’s more about conversion through sales and delivery.”
Considering this, the CMO’s role should become clear: CFOs are, perhaps, willing to have their minds changed on marketing if the CMO can present clear and evidence-based opportunities for growth, prove the relevancy of their efforts to prioritised consumer segments, and draw a clear line between their work and boosting the productivity of the sales department.
Alena Bennett agrees: “A strong partnership between a CFO and CMO is an incredibly powerful asset to an organisation looking for data-driven growth. In fact, I see the CFO and CMO as unexpected allies, both steadfast in the pursuit of growth and predictability of performance. When I see this partnership work, marketing is a genuine performance lever that has the potential to reduce the uncertainty that’s so rife in today’s commercial climate.”
While the CFOs we spoke to by no means provide an exhaustive or definitive view of CFO sentiment nation-wide, the outlook is certainly not as grim as a quick look at Transmission’s numbers might imply. Positive relationships do exist between CFOs and CMOs in our market, when the two can align on priorities and make efforts to speak the same language. For those who don’t feel they are there yet, assess what you’re asking for, determine how aligned it is with the business priorities and work out how to position your strategy as a business opportunity not a cost. You may be pleasantly surprised.