It’s no secret. Finance and marketing are oil and water. They don’t mix well. Finance is often perceived to have onerous authority over budgets, plus audit/oversight responsibility. As a result, the journey toward better insight into marketing payback often gets derailed from the start when finance asks what it believes are logical and simple questions, but which marketing interprets as a challenge: “Is our marketing generating shareholder value?” “How do we know it’s working?”
Hearing this as a challenge, marketing moves into “justification” mode. And since marketers are creative and articulate types, they usually answer with a stream of ad-hoc evidence, anecdotes and metaphors which individually may not be so convincing, but together create just enough executive committee fog to deflect the discussion. Case closed.
Well, maybe not quite. The result is often a stalemate in which the inherent subtleties of marketing are explained with superior powers of persuasion to cast doubt on the wisdom of cutting marketing spend.
Avoiding “Insight Opportunity Cost”
Of course this doesn’t help the organization get any smarter. In fact, it actually has a significant “insight opportunity cost” since all the resources that could have been directed towards the pursuit of true insight get diverted to “proving” that marketing works.
Successful marketing measurement, like many other challenging tasks, is a function of effectively deploying constrained resources on a few key focal points rather than fracturing the effort in a broad search for the “preponderance of evidence”.
To illustrate this, imagine the payback insight you seek is trapped inside a large wooden log and splitting the log open is the only way to extract it. You can split the log by striking the right point with a sharp ax in a single blow (well, maybe two at most), or you can endlessly pound it with a sledge hammer until it (or you) turns to dust. Which would you prefer?
Similarly, CFOs are more likely to get the answers they need by approaching the marketing payback question differently – in a way that generates productive engagement rather than defensive deflection. Doing so requires three specific shifts in how most CFOs would normally approach the matter of marketing’s financial contribution:
- First, CFOs should acknowledge that good marketing does create shareholder value, and if things are done better, results will be beneficial. Questions of discovery tend to work well, such as: “What can we achieve with good marketing?” “How well is our current marketing performing?” “How can we improve the payback we’re getting?”
- Second – and difficult as this might be for most CFOs – it will help to embrace uncertainty, especially in the early stages of marketing measurement when the unknowns will outnumber the knowns. Be patient with ambiguity and willing to accept “I don’t know…” as an answer from marketing in the near term, provided it is followed in short order by “…but here is what we can do to find out.”
- Third, be patient. Premature demands for precision will backfire in the form of higher weighting of the more measurable marketing elements such as web site traffic and direct response programs – even if those aren’t the real drivers of your success in the marketplace. The questions you’re asking will take some time to fully answer. Expect to see some progress quickly, followed by more in measured increments. Don’t assume that applying time pressure will speed discovery. More likely, impatience will be met with passive-aggressive resistance which will surface many more complex obstacles than you or the rest of the finance team have the time or ability to conquer.
Bottom line: If the spirit of your inquiry is interpreted as a quest for insight rather than an attack on the marketing organization, you’ll get much closer to the answers you’re seeking, much faster.
This article originally published in Forbes. July 2013.