Marketing leaders are now working on their 2020 marketing budget proposals and assessing strategy. As part of this ritual, marketing practitioners and analysts are scurrying to collect the (right) data with the goal of making a solid business case for spending and investment plans.
In recent weeks, my conversations with Gartner clients, who work in finance alongside marketers, reveal that finance leaders crave more context about marketing budgets. The CFO, after all, has accountability for and accuracy of overall financial performance.
Questions from the finance team include:
- Is the marketing team making the right investments?
- How can the business measure the success of marketing efforts?
- How can the business allocate the right amount to marketing in the coming year?
- How can marketing tell the right story to other business stakeholders?
My colleague, Jennifer Polk, VP, analyst, and I came up with three potential scenarios. Let’s consider them from best-case to worst:
- Genuine interest in marketing trends: Under this scenario, the finance leader is intellectually curious and truly wants to learn more about marketing. The motivation may be as straightforward as learning to speak the same language of marketing.
- An alternative agenda: The finance leader may want to cut back the marketing budget but hasn’t explained why. Under this scenario, executive management may lack trust in a product or service’s future and may want to reallocate funds to more pressing initiatives.
- A lack of trust in the marketing leader: Finance leaders may not be convinced the CMO has made effective use of technology, paid media, or staff. This is the most worrisome of scenarios because as we all know: trust is hard to build and easy to lose.
These scenarios highlight why marketing leaders need to improve how they explain strategy and discuss marketing’s impact on business results. Marketing leaders need to be proactive by taking these steps:
- Simplify presentations to executive management, including the finance leader, focusing on high-level points.
- Be mindful of the executive management team’s ability to comprehend complex concepts about dynamic environments.
- Include supporting documentation, such as Excel files and data visualizations, in an appendix.
- Share select anecdotes – using visuals, if available – to back up key points.
- Follow these best practices throughout the year – not just during the annual budget preparations.
Some marketing leaders will have a tougher time than others to convince the CFO and other executives to support their proposals. Many will have to scale back their spending proposal. Before that happens, Gartner marketing clients can review recommendations laid out by Ewan McIntyre, VP, analyst, in a series of reports on cost optimization. Start with: “Driving Cost Optimization Across the Enterprise: A Marketing Perspective.” (Gartner subscription required.)