Last year, I wrote a letter to CMOs, giving them some guidance from an agency perspective. I wanted to help them become more effective in working closely with their agency partners to drive successful business results. With the dawn of a new year, I thought it might be helpful to write a letter to you, the CFO.
You may wonder, “Why are you addressing this to me at all?” Many CFOs are used to keeping marketing and agencies at a distance, knowing CMOs are in place to ensure success. However, the Web and newly empowered customers have forced most businesses to reinvent themselves in the past five years. This reinvention has broken down traditional barriers between departments and fundamentally reshaped the structure of corporate activity. The distance between marketing and finance has been reduced to the steps across the hall from your office to the CMO’s office. I hope my perspective will give you some tools to make that distance even smaller.
The Pro Forma
A message I’ve been delivering to marketers over the past year has been the importance of being able to make assumptions about data and using those assumptions to build financial pro forma models. These models help drive an overall monetization strategy for the Web (and often for all online channels) and lend themselves to robust ROI (define) calculations. I suspect you’ve already seen some of these models in budget meetings.
My advice: get more involved in developing the pro forma for the Web team. Help them gain a greater understanding of all the financial elements involved in running the business and lend your expertise to improving the models’ robustness. Use your experience and knowledge to raise their game.
The Profit Center
If you’re already selling goods and services on your Web site, you know the impact it can have on your bottom line. If your site is just a brand advertisement or information/support site, perhaps it’s time you put it under a little more scrutiny. Every site needs to be able to move from just being an expense to becoming a potential profit center, and someone must drive that point home.
Consider a site that’s currently doing only brand building. How can you turn that into a potential profit generator? Perhaps your company has strong customer advocates and they’re interested in buying branded merchandise, such as shirts and bags (don’t laugh; have you visited M&M’s World?). On a more serious note, how far along the path toward online customer self-service have you traveled? Now might be the time to see how easily that can be integrated into your brand-only site.
The Nuts and Bolts
As the worlds of financial analysis and Web site analytics grow closer, now’s the time to designate a lead in your organization to help bridge the gap. The Web and marketing teams are creating scorecards, making investments, and pushing hard for big ROI. Lend them a hand through a dedicated individual that will ensure their work becomes part of your overall organizational perspective.
One of the best reasons for doing this is the requests you may have already seen for performance-based bonus added to the marketing budgets. My recommendation to marketers is to reward individuals, teams, and agencies for achieving site results. This is a natural extension of traditional performance-based compensation to a domain where results can actually be measured. Getting your team involved helps legitimize these practice and ensures it’s done in a fair and responsible fashion.
Finally, sit down with the CMO and his analytics team, create a monthly scorecard that meets both of your needs, and communicate it effectively to the rest of the organization. This integrated scorecard for online performance can demonstrate the importance of Web analytics to the entire company and the close connection between investing in the online channel and creating profit from it.
If you’re already doing all of the above, I salute you. The companies that acknowledge the new world of measurable and actionable marketing and its connection to ROI are going to be first to the brass ring.
While ad fraud has become part of every marketer’s vocabulary, attribution fraud—the practice of gaming outdated attribution models to justify self-serving means—has ... read more
When you’re just starting out as a business owner it’s easy to become wrapped up in the seemingly endless number of metrics ... read more
Something I’m asked frequently at conferences and from marketers is what metrics they should be striving for from their social media marketing. ... read more