How to tell your CFO you need more Marketing Budget
Most creative marketers don’t aspire to become accountants.
Sure, some marketers love data and statistics. But, for many, the financial conversation produces anxiety.
We want to create, make pretty, and persuade — not to spend hours figuring out budgets and return.
If you are breaking out in a cold sweat reading this, then I have a script that will change your (work) life.
Rethinking Return on Marketing Investment (ROMI)
Marketers love acronyms as much as we like winning. Give us a KPI, OKR, CPM, ROAS, CTR, CTA, MQL, SAO, or CLV and we’ll go after it like it’s our job! (Because it is our job.)
There is one metric that is harder to quantify: return on marketing investment (ROMI). It is the ultimate calculation that shows the ratio or percentage of outgoing investment vs. incoming revenue.
It sounds simple: marketing spends $x and brings in $y.
Except, it’s not that easy.
Measuring What You Can’t Control
Marketing is a long-term game. It takes time to build brand awareness, customer loyalty, and market preference. One product fail, natural disaster, or celebrity tweet can upend years of loyalty.
Marketing spending also goes beyond advertising dollars. Millions go into overhead to create the marketing, technology stack, developers, equipment, research, and all the support functions that keep operations moving.
This a huge number and - like product, the economy, and competitors — something that the average marketer can’t control.
So, how do you measure this mythical calculation? What do you say to the CFO who puts you in the hot seat with the dreaded question:
“What am I getting for return on my marketing investment?”
Faced with this question, marketers need to do what we do best: spin it.
Spin it to Win it
We talk about marketing mileage at Corporate Prose. It is the concept of building in return on investment within each tactic nested into your strategy.
Your overall marketing strategy should align with your corporate strategy. If the corporate strategy is focused on expanding into new markets, geographies, or increasing profitability in certain sectors then your marketing strategy should reflect this.
Take those corporate goals and break it into distinct streams of activities. Then spin to win with the phrase marketing mileage.
Essentially, you are showing how you are spending your marketing budget WISELY.
It’s hard for a CFO to argue with pragmatism. And, of course, some good ole marketing razzle-dazzle.
The Marketing Mileage Conversation
The financial conversation is a mix of real business strategy with a bit of showmanship — when needed.
Take a cue from Billy Flynn in Chicago and give them the old razzle dazzle.
CFO: You asked for $$$ this year. Are you insane? What will I get for $$$ dollars? Can you do $?
Give 'em the old razzle-dazzle. Razzle dazzle 'em. Give 'em an act with lots of flash in it. And the reaction will be passionate.
Marketer: To meet corporate goal M, we are going to do N, and our primary tactics will be O, P, &Q. We estimate that to get to this target we will need to invest $$ to execute the plan which will help us achieve M.
CFO: That seems like a lot for N. How about $? Also, we don’t have the budget to hire anyone else so don’t even think about asking.
Marketer: Yes, we built more Marketing Mileage into the plan to provide a greater return on marketing investment for each stream. For example, we will spend $ for tactic P - but we will use that output across 5 different channels in 10 different touchpoints. If you divide the initial investment by the 10 touchpoints, then we can maximize our return.
CFO: What are you saying? Is that even a real term? But, I guess spending 10% of $ isn’t crazy. But what is going on with your request for Z? That seems like a risk.
Give 'em the old three-ring circus
(Stun and stagger 'em)
When you're in trouble, go into your dance
Marketer: Yes, we are using our budget wisely to meet the company revenue goals. Z is a new activity that we would like to try. It is a trend that we think may be able to get us ahead of the competition in the category. It is a bit more of an upfront cost than we usually ask for, but if it works it will accelerate our sales velocity.
CFO: So, you are just spending money on something that you don’t know will work? Sales velocity — we should just buy the sales team roller skates.
Marketer: I understand your concern. I was concerned too — at first. That’s why to mitigate risk, we are categorizing this as a market test and timeboxing it. Then, we will provide metrics and recommendations.
This initiative should speed up the marketing process to get a buyer further into the sales funnel.
This time is opportunity cost — imagine how many hours our sales team wastes chasing junk leads. I mean how many steak dinners and golf tournaments do they need to attend? Am I right?!
CFO: Yeah, I see those expense reports. Those guys are living the high life while my team is counting coffee beans spent on the ‘not free’ coffee in our pantry.
Ok, I’ll give you $$ can you work with that? We can evaluate further investment after your test.
Marketer: Yes, I can work with $$.
But…about that extra $ I requested…
It’s about our ROAS. Our CTR is dropping and I think we can improve MQLs by 30% if we increase our CPM budget. But of course, the algorithm for SEO keeps changing which means our long-tale keywords aren’t performing as we would like so we need to invest more into digital for paid SEM because who knows what’s going to happen with our organic SERP.
Razzle dazzle 'em
Show 'em the first rate sorcerer you are
Long as you keep 'em way off balance
How can they spot you've got no financial talents?
And about that ABM campaign that sales asked for. It seems they want more SAOs by using our SDRs. I mean how many SQLs does it take to make a sales guy actually follow up…
CFO: Ok, here is your extra $. I’ve got to G-O.
Razzle dazzle 'em
(And they'll make you a staaaar!)