Business Value, Opportunity Cost, and the Future of Marketing and Communications
I had a conversation two weeks ago with the CFO of a top global company. We were talking about connecting Marketing and Communications to cash-on-cash Business Value Creation. Believe me, when you open that particular door with a Chief Financial Officer, a riveting and robust conversation is sure to result. This one was no exception.
About 20 minutes into the conversation, the CFO started talking about the 30+ different software tools that their Marketing and Communications teams have deployed in their quest for improved performance and impact. The conversation had been pretty predictable, but then he exploded this softly worded statement in the air between us like a grenade:
“At the end of the day, most of these software tools focus on cost optimizing different marketing outcomes. Our problem is that we’ve no idea what cash value the marketing outcomes have, or if they’re valuable at all. So, while we can see that we got more advertising impressions or clicks or whatever for our money this quarter over last quarter, we are no closer to answers to the questions that matter most. We still have no idea whether we are spending the right amount on Marketing, PR, etc., or whether the money we do spend on those things is worth it.”
In four sentences, this CFO went straight to the heart of the challenge facing Marketing and Communications in too many companies:
These are not new questions. But today business leaders are asking them with a greater and greater sense of urgency and deepening frustration. We are nearing a very significant tipping point.
My teams and I have been working on a Business Value approach to Marketing and Communications for a decade. As we marched up “Maslow’s Hierarchy,” we learned far more than we ever thought we would, usually when we had come face-to-face with a new problem or perspective. In so doing, we’ve found quite a few rather existential questions, each with powerful practical implications.
Here are eight to consider:
- Like the proverbial tree that falls alone in the forest, if you don’t know how to monetize your brand, does it have any Business Value?
- If the cash-on-cash value of Marketing and Communications is unknown or unproven, how can anyone possibly cost-optimize it?
- If the Business can’t quantify what Revenue, Margin and Cash Flow impacts they would lose if they cut Marketing and Communications spend, how can they understand and calibrate the downside of doing so?
- If the Business can’t put a cash-on-cash value on their Marketing and Communications investments, how can they prioritize where to spend their next dollar?
- If Marketing and Communications don’t know the relative cash-on-cash contribution of their investments across Paid, Earned, Shared and Owned channels, how can they possibly know how to spend their next dollar most effectively?
- Does Creativity have demonstrable cash value to a business?
- Does Confidence produce Business Value?
- Can you put a cash-on-cash value on Trust?
Answering these questions – and others like them – is crucial to permanently changing the Business Value conversation between marketers and communicators and their business leaders. But the professions’ inability to prove their Business Value in the financial terms demanded by the Business damages financial performance, shareholder value and stakeholder allegiance. It’s a very big problem, with a lot of money at stake.
But there also is great news. Properly conceived and executed, Marketing and Communications are powerhouse contributors to a company’s growth, health and prosperity. In most companies, these organizations create loads of Business Value every day. We’re talking real financial impact, quarter after quarter and year after year.
Imagine what you’ll feel when you can prove it.
Imagine what will happen when everyone can see it.
Imagine the possibilities when everyone believes it.