With calls for executive accountability increasing, major marketers are learning to speak a language that only a CFO
could love.

By: W. Eric Martin

Used to be, marketers had only a few basic questions to ask and answer, from What are my consumers like? to How can I help them?

But the questions are radically changing these days: How effective are your marketing efforts? How can you measure that effectiveness? What’s the ROI for direct mail and other elements within the marketing budget? Where can you trim costs to improve the bottom line without compromising your effectiveness?

And it’s no longer marketers asking themselves such questions but rather the company’s chief financial officer. Driven by increased scrutiny on bookkeeping and a desire for market growth, CFOs have ratcheted up pressure and expectations on marketing executives in recent years. And while CFOs are an audience many marketers aren’t used to addressing, they are becoming unavoidable.

“CFOs expect a defined process of procedures and measurements,” says Lyn Benton, a business and mathematics professor at Dean College and former vice president at Lotus Development Corporation, now part of IBM. “Some of that is due to [the Sarbanes-Oxley Act of 2002, which revised accountability standards at public companies], and some is due to a desire for market improvement. CFOs want reasonable predictability and transparency in marketing results, since marketing officers have input in forecasts of future company growth.”

But requests for this accountability often go unanswered. According to a November 2005 study by the CMO Council, just 49 percent of companies with revenues over $500 million reported using formal marketing performance scorecards. At smaller companies, only 20 percent report using performance scorecards although 58 percent claim to have a scorecard under development. “If marketers don’t measure their results and demonstrate their worth, it is more likely that senior management will consider marketing programs when expenses need to be cut,” says Benton. With CMO tenure averaging 26.8 months, according to a 2007 study by executive search firm Spencer Stuart, marketers risk having themselves cut, too.