Neil Bendle heads up the Marketing Accountability Standards Board and is the co-author of “Marketing Metrics”.
They are two solitudes – operating in isolated siloes, regularly clashing with one another, insistent on their point of view. So why do finance and marketing act like they are on opposing teams? Why the rancour? The lack of respect? The budget skirmishes?
For starters, they’ve never shared a common business vocabulary, using terms and expressions that are foreign to each another. And neither side has much interest in learning a new language. Finance holds marketing in low esteem for their negligible financial acumen. Marketing sees finance as cost-cutting technocrats, risk-averse and short-sighted. Finance has no clue what marketing does, while marketing is unable to read a balance sheet.
A big source of tension is their conflicting mandates. Marketing believes it has to spend money to make money, and subscribes to the adage that “not everything that can be counted counts”. Finance believes its job is to manage costs. Marketing is a cost centre, in their view, whose spending powers must be kept in check.
Perhaps the most acrimonious point of contention is their lack of alignment around the performance metrics that matter. For marketers, success usually means a gain in some intangible measure like brand awareness and preference. Marketers are giddy when their campaign results exceed expectations. Whereas finance only cares about cash flow and operating margins. They insist on knowing how marketing intends to influence those key measures. And of course marketing has no clue how to connect any of the metrics they care about to business outcomes. Marketing just knows, intuitively, that future cash flow depends on happy customers who love their brand. But finance wants proof of that assumption. The fact that marketing has no credible evidence confirms their bias that it’s all “smoke and mirrors”. To finance, marketing is a world of make-believe, unaccountable and at worst delinquent.
Yet for businesses to succeed, at a time when brand loyalty everywhere is up for grabs, finance needs to see marketing as an investment and not simply a P&L expense, subject to arbitrary cutbacks. At the same time marketing has to be more accountable, making spending decisions as though they were using their own money. Today marketers have no idea how much impact their spending has on revenue growth. They just know the cost of running media ads.
There are many deep-rooted organizational and cultural barriers in the way of a more collaborative relationship between marketing and finance. After all, finance looks at the business as a ledger sheet, where making your numbers is all that matters, while marketing is driven by more conceptual thinking and drawn to creative expression. The truth is, finance people will never make good marketers, and marketers will never make good accountants. Yet somehow they have to find common ground – learn to play off each other’s strengths – and come up with a set of mutually acceptable measurement standards and models (like brand or customer equity). They also have to work more closely together throughout the marketing planning process, approaching every spending allocation decision as a business case for investment. Marketing should play a key role in setting the short and long-term growth objectives of the business, while finance helps with the cost/benefit analyses and shows how to optimize spending, not simply curtail it.
That job of developing accepted standards for the measurement of marketing is the singular mission of the Marketing Accountability Standards Board, a cross-industry forum of senior marketing professionals, academics and finance experts under the chairmanship of Neil Bendle. A former accountant himself, who once served as the Finance Manager of the Labour Party in Britain, he is an Associate Professor of Marketing at the University of Georgia and best known for the popular book he co-authored called Marketing Metrics (now in its 4th edition!).
I started by asking Neil why he crossed over from finance to become a marketer.
Stephen Shaw (SS): So, well, let’s start because you have quite an unconventional career path. You started out studying ancient history, of all things. That was interesting. You moved into managerial accounting. And at one point, you served as the British Labour Party’s finance manager, which is pretty cool. But then you moved into marketing. And now today, you’re one of the world’s foremost experts on marketing measurement, which I kinda find ironic because marketing and finance have always been, sort of, mortal enemies. What made you cross over to the other side and become a marketer?
Neil Bendle (NB): Yeah, well, to be honest, it’s been a fascinating journey. And, you know, I’m not the sort of person that had, like, a life plan at the age of six, and it’s just rolling out. You can see this is a lot of, sort of, random moving around. And it kinda makes sense when you put it together. But, you know, each of it seems a bit odd. So, you know, ancient history is just a passion of mine. I really enjoyed it. But, you know, it clearly isn’t necessarily what you’re gonna do for your career.
So I went into accounting working at the… you know, I worked at KPMG for a while and then worked in hospitals in London. Working with the Labour Party was fascinating, I think, because it’s such a whole prideful organization, but still was very, very, let’s say, untroubled by legislation. So it felt almost like a, sort of, club-type thing. So legislation came in, and we brought in some legislation while I was there to try and regulate political parties a bit more.
So, you know, the reason why I think this is relevant to what happened afterwards is that there is kind of a surprisingly, sort of, entrepreneurial feel to politics, and so, you know, all the good and bad ways you might think about that. You know, there was just, like, lots of things you could get involved in. So, you know, I would… You know, I would chat to direct marketers. You know, I would understand what was going on, on that front. You know, I’d reach out to various people. So I had some sort of idea of what marketing was. You know, I still was absolutely an accountant, you know? And I’m sure, if you sort of looked at some of the things I said back then, thankfully, they weren’t recorded, this is all pre-social media, I’m sure some of it would make me cringe if I looked at it now. But, you know, I said it was learning a bit of marketing at the time.
I went to do my MBA. And, sort of, Paul Farris, who, many of you will know, he was kind of my professor at Darden, and sort of the lead on the book we…marketing metrics book. You know, worked with Paul a little bit, became sort of fascinating. One of the things that Paul was very keen on was that marketing is about numbers. And, you know, I certainly very much appreciated that.
So I’m coming at it from a numbers background. And I kind of start to see, “Yeah, oh, that’s interesting, you know, and we can try and quantify that.” Is it hard? Of course, it is. Yeah, it’s really hard. But we could try and quantify things, or we could try and sort of explain to people in finance what we’re doing, and why we’re doing it.
And so that’s kind of…I, sort of, fell into marketing that way, as it were. You know, I think there’s so much in marketing that is valuable. And I think a lot of times, marketers, and this is somewhat ironic, are not necessarily greater, explaining to finance people what they’re doing and why they’re doing it. And I kinda see finance… You know, if you think of finance, particularly accounting, as a language, you really need to understand that language to talk to people.
And I think too many marketers have the idea that, you know, they know they’re doing something good and everyone else should kinda know that too. And you kinda think if you were…if you’re a firm and you had that attitude, you know, “We’ve got great products. People should recognize that,” you can’t be a terrible marketer, really. And I think, you know, internally, you’ve got to think, “How am I going to persuade these people that what I’m doing is valuable?” And you kinda have to talk their language, or else they’re just not gonna get it.
So, a lot of what I try and do is try and persuade, you know, marketers that, you know, what they’re doing is good and valuable and they need to tell people how that is. And to do that, they’re just gonna have to explain it in the numbers, you know. They might think it’s hard to put things in numbers, and honestly, it often is, but the challenge is when…you know, when a CFO is looking between two projects, they’re doing some sort of comparison in their head.
You know, the choice is do you want them to make up their own random comparison, which could be completely, you know, strange and completely unintelligible to a marketer? Or do you wanna give them some tools to make that comparison and make that comparison well? And I kinda think as marketers, we need to help giving them the tools to make comparisons well, or else they’re just gonna make the comparisons badly. They’re not gonna stop making the comparisons. You know, there’s only so many ways to go around. (10.02)