Imagine protecting or even growing your current Marketing budget by up to 4% of annual revenue through Marketing and Finance alignment. The days of setting this year’s marketing budget based on the previous year have ended. It is no longer acceptable to use assumptions about the value Marketing provides to revenue generation; facts and data are essential. CEOs and CFOs need a clear understanding of the ROI generated from marketing related investments, specifically analytics, content, research, operations, agencies and channels. It is imperative to gain insight across all channels to better align your entire funnel.
After years of budget increases, budgets are down. However, CMOs are still asked to focus more of their resources on growth and digital technology innovation. CMOs feel they are in a no-win situation with a need for more budget dollars to power additional output and innovation. They realize they must digitally transform and optimize but lack a plan and the resources to do so. As a result, CMO relationships with CEOs, CFOs, the executive team and the board of directors are stressed. Common causes may include:
- Metric and KPI misalignment
- Operational and technology disconnects
- Lack of innovation spend accountability
- Underutilization of MarTech technology investments
Increase Budget Transparency and Alignment for Better Buy-in
Operational systems and data level integrations are essential to improving alignment between Marketing and Finance. CEOs and other leaders must understand how the Marketing budget is used to influence revenue generation. According to industry analysts, an estimated 50 percent of enterprises now use a modern budgeting methodology like Activity-Based, Project-Based or Zero-Based budgeting. Nevertheless, this means an equal number of businesses still use older approaches such as Rolling, Incremental or Perpetual budgeting. Alignment between Marketing and Finance may start with the budget, but it finishes with full accountability for actual Marketing spend as well as accurate, understandable attribution of Marketing spend to company revenue.
The benefits of better Marketing and Finance alignment include:
- Traceability between business outcomes and Marketing spend
- Common KPIs and metrics Including brand, performance, conversion, customer LTV and loyalty metrics
- Streamlined Marketing and Finance budget creation, transfer and approval workflow
- Clear budget ownership, allocation and performance measurement
- Better understanding and accountability of innovation and MarTech technology spend
Industry analysts also find that companies with a high degree of alignment between Marketing and Sales commonly have marketing budgets up to 4% of annual revenue higher than their counterparts.
Ready to Increase Your Transparency and Grow Your Budget?
At CapabilitySource, we know how to align Marketing and Finance. We have partnered with global cloud budget management, work management and integration technology providers, and have implemented modern budgeting systems for some of the world’s largest brands.
Let CapabilitySource help you modernize the way you manage and account for marketing spend through improvements including:
- Marketing and Finance technology evaluation, prototyping, implementation and support
- Marketing budget work management automation and optimization
- Modern budget management technology implementation and support
- Integrated Marketing and Finance dashboard and performance reporting