The following is a guest post from Michael Cohen, chief global data and analytics officer of Plus Company, and Sabaa Quao, chief creative officer of Cossette. Opinions are the authors’ own.
It is no secret that technology is changing the dynamics of the corporate office, from the C-suite to the mail room. The finance and marketing departments are not exempt from this evolution. As the roles of CFOs and chief marketing officers (CMOs) have evolved, an unexpected partnership has formed, with major implications for corporate expansion and increased earnings.
The best way to accomplish a strong CFO-CMO partnership is through improved metrics designed to align financial objectives and marketing strategies — and the key is getting the CFO and the CMO to speak the same business language.
Bilingualism, the ability to speak the language of creativity and finance, is an indispensable skill for today’s CMOs and CFOs. CFOs must understand CMOs have the dual responsibility of engaging and retaining a customer base while driving growth in the firm’s value. These duties are more complicated than ever because of increased reliance on data, AI, and digital platforms.
Conversely, CMOs must understand that selling an idea that takes shape within a marketing plan is simply not enough anymore in today’s business climate. The sale of a marketing idea must also address the technological and financial implications of that idea. Simply put, CMOs must take ownership in the CFO's mandate in managing financial risk amid economic uncertainty.
In this new reality, what specific measures can CFOs and CMOs take to bridge the gap between marketing and finance?
Innovating together: Align tech initiatives between finance and marketing
Technology plays a significant role in marketing operations and decision-making. According to LXA’s State of Martech and Marketing Operations 2023/24 report, marketing technology (martech) now accounts for 30% of marketing budgets, up from 24% in 2022. The report also revealed that 83% of CMOs anticipate increased martech budgets in 2024.
There's a need for CFOs and CMOs to leverage technology to improve efficiency, measurement and accountability in marketing efforts. This should include using AI to introduce prediction and to aid in experimentation and decision-making to enhance business efficiency. And the greater the uncertainty, the bigger the role prediction must play.
Balancing act: Incentivize growth and fiscal responsibility
CFOs must keep an eye on perverse incentives, everything from compensation to the procurement of marketing services and media. The remedy to these incentives is business-aligned metrics and connected compensation incentive structures that can help manage (or more specifically weed out) these inefficiencies. If web visits, brand surveys, and conversion attribution aren't articulated in terms of the incremental/marginal return to the dollar spent, CFOs and CMOs must figure out how to achieve those goals if the marketing staff is being compensated based on those metrics.
Strategic allies: CFO and CMO mutual advocacy in the C-suite
CFOs must hold the olive branch between CEOs and CMOs and advocate for an active role in helping CMOs align with CEO and board-supported business strategy and communication. CFOs should also emphasize the need for investment in relationships and measurement solutions and various types of training, learning, and employee development, as well as talent-pool management. This posture will help CMOs in their quest to prove the economic impact of their marketing investments, which in turn can result in greater funding for innovation and growth strategies.
Data-driven duo: Merge financial and marketing data for strategic advantage
CMOs face growing pressure to defend the economic impact of their marketing investments. They need a single source for reliable, comprehensive data and a system to help them find it, which is where predictive analytics and AI come in.
Beyond assisting CMOs, predictive analytics and AI equip CFOs with invaluable insights from "what if" scenarios, enabling them to make less risky data-driven decisions that directly contribute to the overall financial health and success of the organization. As Jeff Bezos famously said, “The thing I have noticed is that when the anecdotes and the data disagree, the anecdotes are usually right. There is something wrong with the way that you are measuring it.” Metrics are always an ongoing exercise with refinement and realignment — aimed at best capturing the physics of the firm and the market.
You can find successful marketing operations programs — from growth-stage startups to long-established brands — that are only made possible when a CMO and a CFO work collaboratively to understand the levers of growth.
For example, consider a leading consumer insurance brand where the CFO and the CMO partnered on a growth strategy that better managed marketing ROI through crucial initiatives to create a marketing center of excellence, which resulted in the recruitment of key talent with marketing, data, and finance expertise with a shared reporting structure to finance, and enabled the following:
- Investment in both centralized data infrastructure tailored to marketing uses and established key partnerships with major tech platforms like Meta and Google using their media buying clout to gain greater access to media data from these tech platforms;
- Appointment of independent vendors of marketing measurement and optimization technology; and
- Contractual enforcement of their media agency to utilize the software for both planning and optimization, as well as to provide reporting on their performance back to the marketing operations stakeholders.
This blend of organizational change management, innovative and scalable technology and enforceable commercial terms with both partners and agencies, enabled this brand to establish the practice of financial accountability that we are advocating for.
Economic experimentation as a collaborative journey invests CMOs and CFOs with a sound approach to managing risks around data-driven decisions and has created a true dynamic duo. Although more work needs to be done by CFOs and CMOs, progress is already being made as those metrically aligned will have a greater chance of securing executive buy-in and increasing the likelihood of a firm’s growth, with predictive analytics and AI as the instruments to deliver that success.