As a finance leader you've got both feet grounded in the numerical realities of here-and-now. Truth be told it sometimes feels as if your marketing counterparts are floating above on clouds of soft metrics that are disconnected from the business' financial scorecard.
Why Finance is Skeptical of Marketing
The good news is that this is a cloud with a sliver lining. First let's understand why this disconnect exists, and then we'll show how technology advances are finally building that much-needed bridge from marketing investments to their financial impact in a quantifiable and even predictable way.Here are three contributing factors to the delta between current marketing metrics and what finance executives really need to know about their companies' marketing investments:
#1: GAAP—According to CMO.com, as GAAP attempts to align expenditure and benefit time horizons, marketing spend frequently gets treated as an expense rather than as a capital investment.
#2 Channel Confusion—While even the most hard-core numbers-cruncher will acknowledge that marketing augments sales, assigning a monetary value to that contribution has proven elusive. And, "it’s more difficult than ever in our digital, omni-channel age to identify the portion of...success attributable to marketing alone," according to CMO.com
#3 Measuring the Future—Functions like procurement and distribution measure by dollars saved; sales by revenue; yet due to its focus on the future, marketing has leaned on softer metrics like reach, engagement or recall that don't easily correlate to financial impact.
new Technologies Usher in New opportunities for marketing accountability
As marketing expenditures in consumer brands click up into the trillions, the pressure is on to get a handle on what those dollars are doing for the business. And recently a new category of marketing metrics have emerged that answer the call. Known as unified marketing measurement and optimization platforms these solutions are revolutionizing a business's ability to forecast and measure forecast marketing's financial contribution.
To illustrate this point, here are three previously unanswerable questions that Keen's unified marketing metrics platforms is addressing with accuracy and in real-time:
- What is the financial contribution of marketing across all channels and programs?
- If I spend more on marketing, how much top-line growth and EBITDA impact can I expect? (replacing, “How much can be cut from the marketing budget without a deleterious effect on sales?)
- Where do I have opportunity to increase marketing investment profitably?
These next-generation measurement and optimization solutions enable financially based marketing decisions and introduce a fresh opportunity for closer collaboration between finance and marketing.
Learn more -- download our eBook Marketing Metrics for Finance Leaders.