A couple of years ago I read with interest an excellent report written by Hunter Ruthven which highlighted the fact that in a survey 76% of the 171 senior finance executives felt “unable to sufficiently calculate what is gained through marketing spend”.
I have little doubt a similar survey of 171 senior marketers would reflect them throwing their arms up in exasperation. The fact is Financial Directors are accountants and the nature of their work focuses on measuring, reporting and analysing – all necessary in any business. They are there to ensure the business machine operates efficiently and effectively and most importantly that the wheels don’t fall off.
Marketers are there to drive sales and trade to the business – without which the FD would have nothing to measure. But marketers can spend huge amounts of money and understandably FDs are keen to ensure this is money well-spent. Given the creative nature of marketers’ work, it would be easy to get carried away with a project or campaign.
The survey entitled The Value of Marketing Report undertaken by Econsultancy & Marketing Week went on to say that 62% of FDs believe that marketing is critical – which suggests that a rather worrying massive 38% thought it was not!
Accountants and marketers are like water and electricity – both extremely useful but they just don’t mix that well. And it is a well-known fact some aspects of sales and marketing can be measured quite accurately and some cannot. For example, a campaign to mailshot potential customers followed-up by telesales would be easy to measure, with a cost allocated to all the components of expenditure and a precise measure of sales income. But even what appears to be a clear cash in / cash out evaluation ignores the impact that such as reputation, advertising and brand awareness may have had.
Items such as branding, are notoriously difficult (if not impossible) to evaluate. Imagine a weekend of television sport – Six Nations Rugby. The sponsors – RBS must spend vast amounts on having their brand emblazoned everywhere. I wonder if any new customers have ever picked up the phone on a Monday morning and said, “Hello. I saw your logo on the pitch on Saturday and wondered if I might open a new account with you”; doubt it. But there is little doubt that branding is important in attracting and retaining customers. Names like Rolex, Jack Daniels, Rolls Royce, Gucci – all sell products. Other brands instil confidence which ultimately attracts business.
Although FDs recognise intangible assets, I believe they are more comfortable with tangible items. Things you can cost, evaluate, depreciate and quantify. For marketing to be successful, usually a multi-channelled, multi-pronged approach works best. A co-ordinated blend of brand awareness, online and offline advertising, direct sales, social media, networking, corporate entertainment, etc. But not all the different facets that make up integrated marketing are measurable.
Marketers deal in intangibles – “fluffy stuff” which inspires customers to buy. They deal with customers’ aspirations, feel-good factors, nice packaging and attractive smells. These intangibles also exist in areas of art – in music, sculptures, literature and theatre. And they exist in sport when you see breath-taking performances. As a lump of stone, Michael Angelo’s “David” is probably worth very little but given the “Michael Angelo brand”, the craftsmanship and the fact that it is rare and unique and it suddenly becomes immensely valuable.
But marketers do have a responsibility to try to analyse and measure their own success – as far as is practically feasible. Often they have to make do with comparing the “Big Picture” – how well they are doing in comparison to their industry peers, or if that is not practical comparing their own year-on-year results. But even that will not differentiate which elements of marketing activity generated the best ROI which the worst.
The closest FDs and marketers will come together is if they agree that they are different. Marketers will never be able to deliver the degree of measurement FDs demand. But both marketers and FDs are vital to the very existence of any business.
References and further reading