To recover from COVID-19, we need to make friends with CFOs. Stat.

Here’s how.

Research reveals a gap between CMO and CFO measures of ROI

I know what you're thinking … ‘Not another marketing piece that tells me how times are uncertain!’

We marketers all know about the uncertainty. Sitting in our home offices, barely hanging on to our careers, losing our minds. Hey, we already lost our pants, back in July.

So, let’s cut to the chase. 2020 was terrible for most marketers.

Budgets were slashed in an overnight blood fest. None of us could explain any longer why anybody bought anything. Toilet paper one week, flour the week after, sourdough starter the next. Suddenly, you can’t find salt in any grocery store for weeks! What? I don’t know.

And we still don’t know what anybody wants. Work from home, office, or your car – like Shia Labouf? Home school, no school, back to school?

So here we are, parachuted into Q4, a time where most of us are tasked with getting 2021 budgets approved. Somehow, we are supposed to decide how much budget we need to carry on with marketing– and keep our jobs. Say what? We don’t even know what’s going to happen next week. Let me lend a hand. Our recent research may help to point you in the right direction.

We asked CFOs about marketing budgets

A few months B.C. – that’s Before COVID – we at Empathy started a research project to determine how marketing budgets are set in Canada. The idea was to ask CMOs and CFOs about their budgeting process and find insight on best practices. We partnered with Leger, the AMA, the CFO centre, and McMaster University.

Then COVID hit. Quarantined at home, we realized we would change parts of the study to reflect current times.

Budgets in crisis and beyond

Let’s start with what goes on at the C-suite when business is under extreme pressure. In a crisis, almost
⅔ of CFOs (65%) adjust their marketing budgets to protect cash flow.

But only 27% of marketers consider cash flow when making budget adjustments. Rather, they tend to focus on expense control (36%) and long-term brand value (18%).

That’s a curious phenomenon at a C-suite level. So we dug deeper. It turns out, even outside of a crisis, marketing and finance both think that the current way we talk about budgets needs work. We tend to base marketing budgets on how much money we’re going to have, not how much we are going to need to achieve our goals. And the latter, what we need to get to where we want to go, is what everyone agrees should be the new base.

How do you get your budget approved this season?

Answering the question of how much money we need isn’t as simple as it sounds. However, a good start is in building the right capabilities. The following are the two that our research found CFOs were most interested in:

• More capabilities to help us understand external factors to the organisation (47%).
• The resources to glean insights from it all (53%).

My advice: take the opportunity to discuss research and insights resourcing with your CFO this fall. It’s a great first step towards a more productive budgeting process.

The next step is to gain alignment around marketing performance. For example, CMOs are confident they can demonstrate past marketing ROI - only 9% of them see it as their greatest barrier to approving budgets. CFOs are far less confident. Nearly a third of CFOs are skeptical about demonstrated returns from past marketing.

This season, meaningful conversations about what the return on marketing should be early on is critical to the successful recovery of businesses and our industry.

If you’d like to find out more about what CFOs and CMOs agree on and the five key steps to building a better relationship between the two, please visit empathyinc.ca.

PS. Nobody actually likes sourdough. There I said it!