To Get Budgets Approved Marketers Have to Go Back to the Basics
December 16th, 2020 | Mo Dezyanian, President, Empathy Inc.
“That was a hot mess, inside a dumpster fire, inside a trainwreck!”
Nothing describes 2020 better than Jake Tapper’s reaction to the first US presidential debate. It was a weird year, that’s for sure. Yes, I say “was” because I’m already over it. And our industry is not unscathed. Truth be told, I do not envy marketers who just went through Q4 aka budget season. First, you had to justify what happened during said dumpster fire. Next you needed to request another kick at the can. That is, budgets for next year.
There is no doubt that we are in the most uncertain climate of the last decade. Consumer behaviour is defying all trend-lines, accelerating multiple years into the future. Corporate innovation has accelerated with it, too. All the while we know that the economic and behavioural effects of the pandemic will be felt long after the health crisis is over.
Get your marketing budget approved…
So how is one to determine marketing budgets during these uncertain times? The answer is, as is the case with many complicated things, going back to the basics.
Before we start, I want to provide some context. At Empathy we started a research project in partnership with Leger, the AMA, and the CFO centre to understand the dynamics between marketing and finance in Canada. The project started before the pandemic, but we had to make some key changes to it as the year unfolded.
We asked Canadian CMOs and CFOs what they thought about the marketing budget process and how they thought they could improve it. Surprisingly, both agree that the current way things are done is flawed. We typically build budgets based on how much money we have – or expect to have – available to us. Of course, that’s much more difficult in a year that follows 2020. A better way to approach marketing budgets is understanding how much is needed to achieve organizational priorities. How do we do that?
…by going back to the basics…
CFOs and CMOs agree that the most needed skill when it comes to budgeting is insights and analytics. Notably, CFOs want investments in more capabilities to help understand external factors to the organisation (47%). And the resources to glean insights from it all (53%).
But of course, during a crisis, budget-setting takes on a whole new dimension. The objective becomes protecting the organization. Survive replaces thrive, as a battle call. In these situations, we found that priorities are drastically different for marketing and finance. Two-thirds of CFOs (65%) adjust their marketing budgets to protect cash flow. But only twenty-seven percent of marketers consider cash flow when making budget adjustments. Rather, they tend to focus on expense control (36%) and long-term brand value (18%).
Focusing on cash management may be the key for marketers to survive budgeting in a crisis. But we can’t completely forget about the long-term, either.
…and then beyond next year
Most interesting to me and contrary to popular belief, CFOs welcome marketing’s long-term view. More often, they feel they look over their shoulders into the past and then watch the step right in front of them – into the next quarter. But they have a keen appreciation for the voice that represents the road ahead in the boardroom. Helping CFOs craft the long-term story of our companies is essential.
The most important relationship in the boardroom
When all is said and done CMOs and CFOs can have one of the most important C-suite relationships. But in order to get there, marketers should focus on:
- Making meaning out of data
- Protecting cash flow during a crisis
- Helping tell the story behind the long and the short of it all
If you’d like to find out more about what CFOs and CMOs agree on and the five key steps to building a better relationship between the two, please visit empathyinc.ca.
Mo Dezyanian is the president of Empathy Inc., member of the CMA Insights Council and has co-written the curriculum for the Chartered Marketer’s media course. You can reach him at for a copy of the study.