In a second pandemic year, as chief executives and company boards comb through their budgets, they are likely to have tough questions for their marketing leaders about the amount and efficacy of their spend.
A Forrester report based on a survey of 150 CMOs suggests that in these challenging times, CMOs must have the financial acumen to connect their investments with direct business benefits, or risk getting left out in the cold.
According to this study, a full 71% of B2C marketing executives indicated that demonstrating the value of marketing to the CEO, CFO and the board will be very challenging during the upcoming year.
“Unless marketers equip themselves with data, finance acumen and the ability to correlate marketing activity with business impact, they will become hopelessly obsolete and get left behind," Mastercard's global CMO Raja Rajamannar said in a podcast interview on this issue.
CMOs have a long slog ahead of them, according to Forrester's findings. As things stand, only 28% of B2C marketing decision-makers are confident they can accurately measure and attribute the incremental business value of their marketing efforts. To aid marketing's cause, it may be best for marketing chiefs to ally more closely with CFOs, to link their investments and actual business impact.
However, the first, and most challenging step for CMOs is aligning their goals with their colleagues in finance, according to the report.
For one, both teams seem to have divergent views and priorities on key organizational metrics such as employee experience and acceleration of the digital business.
Second, both sides may disagree on the focus of investments across the funnel. And third, CFOs may be leery of a raft of marketing terminology - email open rates, social likes or PR impressions - that CMOs tend to use to justify their spend.
Instead, Forrester recommends building out a suite of metrics that covers both short- and long-term metrics to boost marketing's business viability. On one hand, CMOs can use short-term measures such as sales conversion rates and cost per acquisition for a period of three months or less to gauge marketing effectiveness. And on the other hand, they can lean on longer-term brand valuation and equity frameworks to build stronger ties with their colleagues in finance.