Business News
CMOs fail to make business case for investment as crisis bites
Monday 11. May 2009 - Are companies measuring enough and do they have the right tools?
Results from a new survey amongst Chief Financial and Chief Marketing Officers (CFOs and CMOs) suggest that if companies could measure the impact of their marketing campaigns more effectively, they will be able to protect – or even increase – their budgets even in the midst of the economic recession. The Marketing Success survey released today by Xerox, reveals that whilst CMOs (79 per cent) and CFOs (78 per cent) both agree that if marketing could be measured effectively it would show a positive return on investment (ROI), CMOs are struggling to deliver the proof without the right tools or measurement systems in place.
“This is a classic chicken and egg situation,” said Peter Romaine, Director and General Manager, Xerox Global Services, Xerox UK. “Whilst both marketing and financial professionals believe marketing is delivering ROI, they cant show it. Without being able to demonstrate it, its an uphill struggle to argue the case for increasing the marketing budget – and perhaps help to fund more measurement. There is a clear disconnect between the success that both CMOs and CFOs believe the marketing department is delivering, the ability to measure that success and being able to demonstrate the marketing departments ROI. If CMOs could provide the evidence, the research suggests that they could protect or increase their marketing budgets.”
CMOs and CFOs (56 and 33 per cent respectively) believe that by increasing marketing measurement theyll be able to see and show the benefits of that marketing activity better. But marketing measurement remains fairly basic with 81 per cent still using Excel spreadsheets, 47 per cent using paper based systems and 3 per cent with no measurement at all.
Increasing marketing measurement is the way CMOs can drive budget upwards with nearly all (97 per cent) of CMOs and CFOs agreeing that by increasing marketing activity measurement they will be better placed to both see and show how marketing is contributing to the business. The survey also highlights a trend to increase the measurement of marketing activity (70 per cent of CMOs and 39 per cent of CFOs) and that marketing can make a real business and profitability impact on company performance with the majority of CMOs (96 per cent) and CFOs (87 per cent) agreeing.
Said Peter Romaine: “Without the measurement tools to underpin their business case, its going to be hard for marketing professionals to protect their budgets from the inevitable cost-cutting exercises that may accompany the global financial crisis. Advertising, PR and marketing are often the first disciplines to get hit by recession. The results of this survey suggest that if marketeers could extract the right marketing knowledge from measurement and then communicate it well to the Board, they could protect themselves from budget cuts.”
Unsurprisingly, the survey reveals that 47 per cent of CMOs and 65 per cent of CFOs believe that the prevailing economic conditions will threaten marketing budgets in 2009.
“The main problem seems to be measurement – and communicating the right marketing knowledge to the Board – CMOs simply dont have the right tools to do the job well,” said Ian Parkes, director at Coleman Parkes, the research firm conducting the survey. “One of the surprising outcomes of the survey is that there are few companies using sophisticated technologies to measure their marketing effectiveness with UK companies being unable to get a complete, holistic, 3600 view of how their marketing departments are performing. This is making it increasingly difficult to justify expenditure.”
The Marketing Success survey, released today by Xerox, was undertaken amongst 460 CMOs and 167 CFOs within large corporations across France, Germany, Italy, Spain, The Netherlands and the UK.