Marketer’s jobs today are increasingly cross-functional. And the reality today is there can often be misalignment - or even tension - between them and their finance team. In fact, Gartner1 says that business-wide alignment is one of the biggest tasks of a CMO in 2024. According to new research by the CMO Council and KPMG2, just 22% of CMOs rate their partnership with CFOs as ‘truly collaborative.’ In a high-performing business, the finance team should ultimately be one of marketing’s biggest champions, as together, they can act as the largest driver of growth for a business.
If it feels like marketing and finance are speaking different languages, don’t fret. There is a path forward, and it comes with many benefits.
Building alignment requires building trust around a common language, and that language is accurate marketing performance data. When the marketing team can more clearly demonstrate the actual business impact of their media spend, and centralize this data into a single source of truth, it makes it easier for finance teams to forecast growth and fund projects. Once you can confidently prove how your media investments are driving new specific business outcomes, you’ll find your relationship with finance begins to evolve.
Recently, at the CommerceNext conference in New York City, CFO panelists from Uniqlo and Brooklinen strongly agreed that creating a shared language of success metrics opens the door to building a joint framework for how these teams can cooperatively make decisions and investments. They noted that Finance tends to be brought in as an ‘approver’ rather than as an early partner in marketing planning and that bringing them in earlier can help them unlock additional opportunities and strategic ways to leverage funding.
A stronger relationship with your finance team can help marketing uncover and invest in new opportunities to drive growth and achieve common business goals. This can be especially important when moving up the funnel, as changes in this area can take a longer period of time to demonstrate results.
Sound too good to be true? Let's look at a few examples where a shared performance language has helped foster cooperation and ultimately, better business performance.
Example 1: Demonstrating Efficiency Leads to Budgeting Confidence
Alignment Problem
A prominent fashion retailer found themselves facing a familiar, yet worrying, challenge.
The CFO wanted to cut the marketing budget for the following year, as the team wasn’t able to connect their media spend directly to business outcomes and demonstrate the ROI of their investments with confidence. While they were sure their ad investments were driving sales overall, unreliable platform reporting meant they weren’t able to prove it. They needed to establish trust in their marketing metrics before they could drive greater efficiency and profitability, turning themselves from the dreaded ‘cost center’ into a ‘profit center.’
Measurement Solution
The brand needed unbiased, third-party measurement to help understand which of its investments was yielding the highest ROI. The team adopted the Measured Platform to help them centralize all of their media spend, measure its performance against incremental revenue to the business, and streamline reporting performance up and down the funnel.
Since Measured reveals the true incremental impact of media investments across all channels, the marketing team was able to easily identify exactly how many sales were being driven by every campaign within four weeks.
Alignment Solution
Using Measured’s unique blend of media mix modeling and incrementality test results, data showed the brand that they were heavily over-invested in Google Search, which was taking credit for far more conversions than it was truly generating.
By optimizing their spend based on Measured’s insights, they found they were able to cut their budget by over 50% while still maintaining 99% of their sales. With this kind of precision measurement that tied media spend directly to sales, the CFO was able to more easily understand how every dollar was impacting the business and became reluctant to cut their budget.
With this newfound clarity, the team was able to reallocate the remainder of their budget to higher-performing channels while maintaining their higher ROAS.
Example 2: Incrementality Measurement Leads to Self-Funded Customer Acquisition
Alignment Problem
Acquiring new customers can be a costly, experimental journey for many brands. But even once you’ve unlocked a winning strategy, proving how marketing spend is driving acquisition can be difficult, especially for brands with longer consumer consideration cycles. Marketing’s ability to demonstrate the ROI of acquisition marketing is key to building sustainable growth.
An experienced retail CMO wanted to increase spend in upper-funnel channels. Given how expensive it can be, he couldn’t convince the CFO to increase the budget without greater evidence of its impact. Even still, finding the budget would prove difficult.
Measurement Solution
The brand came to Measured to help solve this challenge, at first hoping they could find the spend for upper funnel channels elsewhere in their existing budget. What they discovered after partnering with Measured is that they were able to increase the efficiency of their lower-funnel customer retention program and reallocate those savings into upper-funnel channels, creating a positive feedback loop of growth.
Incrementality holdout testing showed them several key insights. First, their lower funnel programs were bloated after years of relying on platform-reported conversion data to guide their investments. This led to immediate spend savings, but they needed to know where to reallocate the budget.
So, they tested several upper funnel channels and discovered that suppressing existing customers from acquisition campaigns effectively increased the incrementality of their upper funnel media. They now understood the marginal cost of acquisition and were able to separate the ‘free’ sales they were getting due to brand awareness. They realized they could reduce their spending without losing sales.
The team then turned to scale tests to see the shape of their efficiency curve in every channel. They now knew what their optimal incremental ROAS would be for each section of the funnel and were able to identify the optimal spend level for each of those existing channels.
Instead of optimizing campaigns by conversions, for the first time in his 30-year career, the CMO began to consider incremental contribution to the business as a guiding metric, one that the CFO was enthusiastic about aligning to.
Alignment Solution
The findings gleaned from Measured’s incrementality platform led to something spectacular. The brand was able to take the savings from this lower funnel program to fund new customer acquisition, essentially “maxing out” their total budget while maintaining their ROAS targets. This increased upper-funnel funding sent those new customers down the funnel, leading to more incremental gains. Essentially, they built a fully self-funded customer growth model.
“I learned that a marketing guy could actually earn the respect of a finance guy...his job was to find me more money to spend and that my job was to find new places to spend it. That was a whole new relationship between marketing and finance that had never occurred in my career before.”
-CMO, Fashion Retailer
Unified Measurement is the Path to Alignment and Success
Any CMO who has been around the block is painfully aware of how everyday marketing situations, coupled with a lack of aligned metrics and optimization systems, can lead to gridlock and poor business decisions.
“Both the CMO and the CFO need to be on the same page when it comes to viewing marketing as a revenue driver over a cost center.”3 Accurate, unified measurement is the language you need to align your marketing and finance teams.
Schedule a demo today to see how Measured can help your brand make better decisions and improve alignment across the organization.
Footer Notes
- https://www.gartner.com/en/marketing/research/leadership-vision-chief-marketing-officer
- https://www.cmocouncil.org/thought-leadership/programs/cmo-the-force-multiplier
- https://www.forbes.com/sites/forbescommunicationscouncil/2024/02/27/the-cmo-and-cfo-relationship-the-most-important-in-your-business/