Is the CMO-CFO Relationship Healthy?
The Fall 2023 CMO Survey reported some encouraging stats on the CMO-CFO relationship, but also highlighted the distinct challenges that marketers face when working to increase their accountability, transparency and cross-functional alignment.
To start on a positive note, respondents reported that marketing and finance leaders are well aligned when it comes to company goals, strategies and tools/data, with a mean score of 5.0 out of 7. Companies with a greater percentage of their sales from ecommerce channels reported higher alignment (5.5) compared to brick and mortar companies (4.8), which might indicate that alignment is easier to achieve when digital marketing investments can be tied to revenue impact.
But despite this alignment, pressure persists. Over half of the respondents (52%) reported feeling increased pressure from their CFOs, up from 45% in August 2021. Let’s examine some of the key drivers contributing to this:
Digital transformation is progressing, but needs to mature further.
While fewer marketing leaders report their digital transformation journeys (i.e. efforts to integrate digital tactics, employ more testing, and enhance measurement capabilities) as “nascent” (9% in Fall 2023 vs. 27% one year ago), the majority of transformations (54%) are still in the “emerging” stage. Only 13% of respondents reported that their efforts to leverage digital investments to drive and evaluate marketing decisions are “institutionalized”.
Despite the work required, marketing leaders are continuing to adjust their budget allocations in parallel. Mobile spending is predicted to increase from 16% of the marketing budget to 27% over the next five years, but marketing leaders acknowledge that it remains challenging to track the digital customer journey and thus properly attribute mobile acquisition spend.
Marketers struggle to demonstrate the impact of their investments, particularly in brand.
61% of respondents reported that “demonstrating the impact of marketing actions on financial outcomes” is their top challenge, followed by “communicating the role of the brand in business decisions” (45%). The latter has increased significantly, up from 37% in February 2019.
Marketing spending has cooled off from COVID levels, reported at 10.6% of the company budget in Fall 2023 from a high of 13.8% one year ago. Brand-building spending in particular has dropped -42% YoY. However, one upper-funnel brand spend category that is growing is influencer. Respondents reported that they spend 6% of their marketing budgets on influencers today and expect this allocation to grow to 12% three years from now. These activities are reported to contribute very little to company performance, though, with respondents giving the channel’s impact a mean score of 2.4 on a 7-point scale.
I think it goes without saying that digital transformation efforts–which often require significant marketing technology investment and organizational changes–are not easy, but are necessary to increase finance alignment and resource support.
How do these insights from the Fall 2023 CMO Survey compare to your unique opportunities and challenges? Please get in touch; we’d love to learn more from you and your team.
