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Why CFOs Cut Marketing Budgets: “We’ve Done A Terrible Job Explaining What We Do”

Australian dollars cut with scissors.

When things start to get tight at a business, or profits begin to slump, it is often the marketing budget that is among the first to get a haircut.

Marketers are constantly being asked to do more for less, while global economic uncertainty has meant many CMOs have come to expect budget cuts.

But according to Sparrow Advisors New York co-founder Ana Milicevic, the responsibility lies partly on the marketing teams themselves.

“It’s like speaking a different language,” Milicevic told the audience at a Criteo event in Sydney last Thursday. “Marketing is English and CFO land is Turkish. You need a translator.”

Milicevic explained that while her digital advisory firm has positioned itself as this ‘translator’, there is still more to be done in terms of shaping the wider perception of marketing.

“When a CFO looks at your budget, if they’re still thinking of it as, ‘this is a loss leader’ or ‘this is an expense that I’m just needing to fit’, then that’s the worst scenario for you,” she continued.

“Because someone else will come in and pitch to the CFO, ‘look, I can sell you this marketing technology that’s going to do what this department with 20 people can do’.

“That’s starting to sound like a really good cost-cutting measure. If I’m a CFO, I’m very much inclined to buy Accenture’s pitch and say ‘yeah I can outsource this stuff’.”

So how can marketers avoid the CFO’s red pen?

“We’ve mentioned education, but that’s the reality of it,” Milicevic said. “We as marketers have done a terrible job explaining to people what it is we do – everybody thinks they can do our jobs better than we can.”

Milicevic added that problems around understanding the value of marketing are often isolated to certain parts of the business.

“A lot of people know what marketing does, just not somebody with a CFO title,” she said.

The flow of data

Also speaking at the event was UNlshd New York founder of and former Saatchi & Saatchi creative Tom Eslinger.

Eslinger discussed the gaps between creative ideas and data-driven marketing, explaining that although data is now very much a part of modern advertising, the integration of this information is still often misguided.

“We’ve been talking about data and how it drives ideas for years now and sometimes I feel like we’re in an echo chamber,” he said.

“In most cases, especially within agencies — and I’ve worked for two of the holding companies and big independents — most of that information [data] never gets down to the people that actually have to use it.

“The art directors, the creative directors and strategists, the people that actually need to use that stuff to make the ideas.”

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