During tough economic times marketers face many challenges: reduced budgets, fewer resources, a struggle to get customers to convert, and an uncertain outlook that makes planning particularly hard.
At the B2B Institute, we’ve collected and analysed existing data, with renowned experts in the field to develop an evidence based ‘best practice, which we’re calling ‘All-Weather Marketing’. It’s designed to position a brand for future success with advice that’s practical and sustainable, even in trying times – from the emotional response of maintaining your calm and detachment, while others may be in flight, to making the right decisions based upon the long data you have access to.
It would be foolish to assume that marketers make these decisions alone. Identifying the right course of action is the first challenge. Convincing your senior colleagues that it makes sense is the next.
In times of disruption and downturn, one of the most difficult decisions to get right is the choice to keep investing in long-term growth through brand advertising. As we argued in an earlier piece in this series, for many businesses the case for brand advertising actually gets stronger in a downturn. However, that business case has to be balanced against plenty of other, more immediate needs. It has to be strategic and it has to stand up to scrutiny.
In other words, it has to be a business case worthy of convincing the CFO.
As the B2B Institute’s latest whitepaper – the product of a research partnership with Fran Cassidy and the IPA – confirms, your CFO isn’t just a crucial partner for marketing when budgets are under pressure. Finance teams decide how value is measured, reported, and rewarded within an organisation, just as marketers are fundamental in generating that value. Data from McKinsey shows that the average number of roles reporting into a CFO increased from four to six between 2016 and 2018. This reflects growing influence over future revenue and long-term investment strategy.
Many CFOs now oversee areas like data, digital and pricing – all of which impact marketers and overlap with their own expertise. Here, both ‘teams’ share a role in answering the question of how to create value. If marketers want their contribution to revenue and profit to be recognised then they need to start talking the language of the CFO – with shared metrics, plans and metrics tied to value creation – and there’s no better time than now to start.
The case for brand is one the CFO should understand:
The decision to invest in brand marketing during a downturn, if your business is able to, comes down to a strategic view of value. You’re choosing to spend less on chasing limited revenues now, in order to maximise your share of much greater revenues a few months or years down the line. It’s far more cost-efficient to grow Share of Voice (SOV) and the future Share of Market (SOM) that consistently follows it during a downturn, when others are spending less. Inversely, it’s more expensive to try to recover it later when everyone’s spending more. But if you want to store-up future value in this way you have to invest in advertising that’s memorable – brand advertising. The case is a sound financial one.
If marketers struggle to make this case to the CFO, it’s partly because we’ve trained our business leaders to think of the returns from marketing in terms of reduced costs and instant ‘activation’ in the present, rather than increased revenues in the future. A recent LinkedIn study found that 77% of digital marketers attempt to measure Return on Investment (ROI) after just one month of a campaign.
Since most sales cycles are far longer than one month, those returns are unlikely to have born fruit just yet. So instead of pointing to actual revenues, marketers put forward cost-based KPIs as their evidence. When you describe your ROI in terms of cost per click (CPC) or cost per lead (CPL), it’s no wonder that the CFO sees marketing as a cost centre rather than a value driver. It also undervalues the long-term impact of a marketer’s work in a way that old-time reach and frequency metrics tried to demonstrate.
It’s time to be clear on what metrics mean
If we’re to rally the business around the right marketing choices in difficult times, then we have to be clear about the role of metrics – and the ones that really matter. Disruption to the buying journey can cause short-term KPIs to move in ways that don’t really relate to future revenues. We can also see that the half-life issue of after-campaign ‘memory’ can lead to campaign drop-offs with long-term brand erosion effects. That’s why marketers need to make the case for a long-term view of ROI, where activations build from a strong brand trajectory. This involves marketers understanding and translating their sales cycle to develop the best possible plan to maximise revenue over the course of a longer planning arch.
It’s the best way to talk about brand – and nobody understands that better than the CFO.
The Agency Perspective
Chris Bagnall - Transmission
Why do you think marketing to the CFO has been neglected?
I think there has long been a consistent “internal marketing” focus from the marketing department to the CFO to justify and show the value of its investments. The problem is that historically, businesses only had data to support part of their efforts in terms of what’s been working and not. This is why “brand” marketing has been neglected in B2B and demand focussed marketing has taken front stage. Even now we see businesses struggling to justify full spend on all strategies and tactics because they simply don’t have the connected tools and techniques in place to measure the full customer lifecycle and the impact of everything on company performance.
What are some of the way's marketers can increase their sphere of influence with the finance department?
You have to invest in the right tech and tactics to map the entire customer journey, and in turn deliver insights to the finance department that stack up and clearly show the impact of everything you do in marketing on results, over the long term. We shouldn’t be comparing brand vs. demand marketing. We need to start looking at brand in terms of its own place in the journey and how in itself it drives performance for key goals. Getting access to a single source of data truth from the likes of customer data platform (CDP), having agile operations in order to learn quickly and adapt in real time, and close collaboration with internal teams and external agencies to implement these changes quickly is vital.
LinkedIn B2B Institute recently published a white paper ‘Marketing to the CFO: a return to VALUE for marketers’ jointly published with the Institute of Practitioners in Advertising (IPA) and LinkedIn Fellow, Fran Cassidy, to give marketers practical guidance on how to develop shared objectives, language and metrics for value creation with their CFO. You can download it at www.b2binstitute.org.