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Insight: Time to bury the hatchet

A brand new year and yet another survey about the
relationship between marketing and finance. The survey conducted among more than
15,000 business professionals in 17 countries by marketing consultancy
International Marketing Partners (IMP) and market research company GMI, found
that the world’s fastest-growing economies now consider marketing to be a more
important discipline than finance.

Business professionals in Russia, Germany, China and Japan are the biggest
advocates of marketing, with more than 70% of Japanese respondents favouring
marketing over finance. In the UK and US, however, 60% and 56% respectively,
believe in the supremacy of finance. The highest level of support for finance
comes from India, where 69% of respondents believe it is the more useful

Women are marginally more favourably disposed than men to marketing, while
older people believe finance trumps marketing. Sales people come down on
marketing’s side, while business owners favour finance. Overall, ten out of the
17 countries polled believed in the superiority of finance over marketing

Surprisingly, business folk in the US come down on the side of finance rather
than marketing, given the fact that marketers across the pond hold far greater
sway and more board positions and are more likely to become chief executive than
they are in the UK. It is no coincidence that US organisations are so

Ironically, one explanation for the more exalted status of marketing in the
US is the broader role of the CFO, where they are more likely to have an MBA
than a pure accounting qualification, and frequently act as the right hand to
the CEO.

Dispelling the stereotype

The more finance and marketing evolve beyond the traditional caricatures of
bean counting and advertising respectively, the more effective and productive
the working relationship becomes, says Neal Kissel, a managing partner at strat
egy and management consultancy Marakon Associates.

“Arguing about whether marketing or finance is most important merely serves
to perpetuate the stereotypes and the hostility,” he says. “Clearly, they are
equally important, and the focus of debate needs to switch to how to get them
working together more effectively. The more finance evolves into a function that
shapes strategy and architects change for the CEO, the more marketing can
dovetail with that. Likewise, the more strategic marketers become, the more
valuable the role finance can play.”

Clear remit

Many marketing departments have a very clear remit to deliver sustainable and
profitable growth, which is a far broader and more sophisticated role than the
stereotypes would suggest. And some companies are both customer focused and
financially orientated.

Many organisations haven’t progressed that far, though. Robert Shaw, director
of the Value-Based Marketing Forum and visiting professor at Cranfield School of
Management, argues that “the meat grinder of the planning and budgeting process”
distracts boards from the real business of running the company. Boards, he says,
are frequently too far removed from the front line to understand what marketing
does, and marketing, instead of explaining itself, focuses on securing as big a
budget as possible in the expectation that it will be slashed at a later date.

The operating and financial review (OFR) would have forced boards to abandon
this sort of horse trading in favour of more sophisticated and rigorous attempts
to link budgets to strategy and encourage a closer working relationship between
marketing and finance, argues Shaw. But now that the OFR is no longer a
mandatory requirement, he wonders how many boards will wade in and tackle

“I am increasingly approached by finance directors to help them ‘sort out’
marketing. They typically say they don’t know if marketing is well run in their
organisation or whether their marketers are any good,” he says.

However, this new interest by FDs in marketing augurs well. Marketing
generates organic growth, and Marakon’s research found that companies in the top
quartile of organic growth are 13 times more likely to be in the top quartile of
shareholder returns than their low-growth counterparts. As such, FDs need to
understand it better, and Kissell believes finance has a real opportunity in
many companies to add value to marketing. “That involves a change in mindset
from the ‘report-back-to-me-the-return-on-investment’ approach to ‘what needs to
happen for the marketing investment to pay back?’” he says.

Critically, finance has to pay more attention to customer value, not just
shareholder value. “Finance has to worry more about whether the company is
getting more customers to buy more often at higher prices and lower cost. It is
customers who deliver financial results.”

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