This time last week I was on a plane heading back home from Gartner’s Digital Marketing Conference in sunny San Diego. This was my third DMC, and as ever, it was a tremendous pleasure to get to speak to so many CMOs and marketing leaders from a plethora of industries, and spanning B2B and B2C (and all points in-between).
The long transatlantic flight home to the UK gave me valuable time to reflect on the conversations I had this year. A common topic of conversation focused on the challenge of communicating to key stakeholders the value marketing delivers to the enterprise.
Now it would be easy to lay the blame on the complexities of attribution, especially in industries where the path to conversion is complex and simple last click measures aren’t available. But there are often more complex issues at play, bound-up in legacy assumptions of marketing’s scope and function. In some organizations, this can also be tied back to the dominance of other functions, such as sales, finance or IT. And of course, culture and internal politics play no small part in organizational power dynamics, and how that impacts perceptions of the value different functions deliver.
Another contributing factor is the financial planning muscle, or lack thereof within the marketing organization. When it comes to strategic marketing planning, we tend to invest lots of time and effort, using data and insights to dig into the strategic planning components. We use data to inform marketing’s goals, understand the environment and our capabilities and define the areas of strategic focus. However, rather less effort is invested in building a solid business case for marketing budgets.
How do we know this? Well Gartner’s 2017-18 CMO Spend Survey (subscription required) reported that almost half of CMOs and marketing leaders use budgeting methods that simply roll budgets over year-on-year, sometimes applying an incremental increase or decrease, sometimes not. This is problematic, as it relies on past assumptions of the value of marketing investments. In some cases, these assumptions may be many years old, and the logic that informed them in the first instance may either be incorrect or outdated.
Building your financial planning muscle, adopting techniques like activity-based budgeting (or even zero-based budgeting, for the more advanced) is no panacea – it will not fix all your organizational woes. But it’s a solid start. Rather than relying on the past assumptions that built previous years’ budgets, these methods dig into the future value that marketing’s programs and activities will deliver across the planning horizon, building a compelling picture of the projected returns. You start to paint a picture of marketing which backed by a solid financial value base, contradicting outdated assumptions of marketing as a cost base rather than a value creator.
So, when you next think about your marketing maturity, don’t forget fiscal maturity. You may not win a Cannes Lion for that perfectly crafted budget, but you may win the hearts and minds of important stakeholders.