The gap between marketing and finance departments is widening and this isn’t just an internal issue any more, it’s a pressing challenge that threatens the core stability of organisations aiming to stay competitive.
A new joint survey from the Chief Marketing Officer (CMO) Council and KPMG Customer Advisory says only 10% of marketing leaders believe their present marketing investments — often overseen by finance — equip them to navigate economic storms better than their competitors.
This should be of concern to companies, with marketing increasingly tasked with guiding them through uncertainties and pinpointing new customer needs. The study suggests marketing and finance departments need to redefine their relationship.
The issue is as much local as it is global. The FM spoke to two fast-moving consumer goods marketing directors. Both asked for their names to be withheld, with one saying: “I have to deal with the finance guys in a 2024 budget review next week.”
The primary reason for the gap is that the departments have different objectives and metrics.
Says one: “Marketing is primarily focused on driving brand awareness, customer engagement and sales growth. This relies on qualitative data and metrics such as brand sentiment, customer engagement and lifetime value. Finance, on the other hand, is focused on the organisation’s financial health, cost management and profitability.
“It prioritises quantitative data, looking at metrics such as ROI [return on investment], ebitda [earnings before interest, taxes, depreciation and amortisation] and net profit. This difference leads to misaligned priorities.”
Both directors agree that marketing initiatives, especially those aimed at brand building or entering new markets, require more time to produce tangible results. Finance departments, they say, especially in publicly traded companies, might be more concerned with quarterly results and immediate returns.
One of the directors says: “Marketing campaigns and initiatives often involve a degree of uncertainty and risk, especially when exploring new markets or strategies. Marketers may see this as a necessary part of innovating and staying ahead of competitors. Finance professionals, with their focus on ensuring the company’s financial stability, might be more risk-averse and less willing to allocate funds to unproven initiatives.”
The CMO study says marketing leaders who maintain a robust connection with their finance counterparts are now ahead of the curve, pinpointing areas such as marketing analytics, machine learning and automation as their primary focus points for the coming year.
However, the opposite scenario is grim. Misaligned CMOs and CFOs tend to gravitate towards short-term, business-as-usual investments such as brand marketing and digital and social media, which are essential but don’t offer the transformative capabilities provided by machine learning and automation.
The survey says more than a third of marketing leaders describe their partnership with CFOs as indifferent or even hesitant, and emphasises that both departments need a mutual understanding of their potential to propel the business forward. To achieve this, they must align on crucial areas.
The study also identifies the top areas for alignment, with data leading the way. Marketing’s reliance on data demands visibility into predictive indicators, enabling long-term success. Equally telling is the emphasis on machine learning and automation. While progressive, collaborative CMOs and CFOs place this as a key focus, those resistant to collaboration rank it lower, indicating a disparity in future readiness.
Other findings include that only 18% of marketing leaders are confident that marketing and finance have equivalent access to essential customer data and market intelligence. Even more concerning is that just one in four leaders believes customer data is jointly owned and seamlessly shared between the departments.
The CMO study says marketers, as the vanguard of understanding customer sentiments, crafting narratives and influencing behaviour, need to align with the financial strategies and priorities of the business.
And CFOs are told that marketing should not be viewed as an expenditure column but as a crucial investment. They must understand that strategic marketing insights don’t just depict consumer behaviour, but provide a compass pointing to future growth areas.
This piece originally appeared in the Financial Mail.