The marketing world was all a twitter last week when it was announced that Twitter’s marketing group would now be reporting to the CFO.
I found the opinions and reporting from marketing folks to be very Chicken Little. Here are some reports.
Twitter gives control of its hapless marketing department to its chief financial officer – The Verge, May 5, 2015
Marketing Twitter – Six Pixels of Separation Blog by Mitch Joel from Mirum
CFO as Marketing Chief? Maybe Not as Unusual as You Think (or Maybe So) – Advertising Age, May 11, 2015
Most of my CFOs would shy away from taking responsibility for marketing, yet a good number of them have overall responsibility for important areas outside of Finance. Now, really, what does a Finance trained CFO understand about areas like Human resources and Information technology ?
The only important difference between HR and IT and Marketing is that Marketing is seen as a lever to drive revenue, and that areas like IT and HR are good old support functions.
Yet, wait a minute.
- Which C-Suite executive is looked at as a potential successor to the CEO?
- Which C-Suite leader is most often called upon to become Chief Operating Officer, either in conjunction with continuing as CFO or as a stand alone role?
- Who at the executive table is volunteered for dealing with the most challenging and difficult parts of a business?
That’s right. The CFO.
Now what led Twitter decide to give overall responsibility of Marketing to its CFO in a company who’s entire business is about marketing? We’ll never know for sure.
If there is one thing I’ve learned in my years in executive search and my weekly reporting on CFO Moves is that the official story and what is really happening behind the scenes can some times sound like they are fiction written in different genres.
But that won’t stop me (or others) from speculating.
In the Twitter situation, it seems that Marketing is falling under the purview of the CFO while the company is looking to hire their best next marketing leader.
The positives for Twitter of this temporary move could include:
- Someone needs to take responsibility for this very important function. Why not Finance?
- There could be no better way for the CFO to learn the marketing function than by taking responsibility. Most CFOs learn well under pressure.
- CFOs love to challenge the status quo. This is an opportunity to shake things up.
Most importantly, in a company where marketing is key to the product and the mission, the CFO needs to truly understand the value of marketing so they can say yes to the big dollars needed to fund the Twitter marketing machine.
So, is the sky falling?
Gary Cokins says
Samuel … Although your suggestion will be viewed as radical it is points to an issue. There is a wide gap between the CFO and marketing and sales. It needs to be closed.
Customers are the source of shareholder wealth creation. Marketing and sales’ goals have been to grow market share and increase sales. It should be to increase PROFITABLE sales. Accounting information helps answer which types of customers are attractive to retain, grow, win-back and acquire as well as how much to OPTIMALLY spend doing these with offers, deals, price discounts, and marketing campaigns. I explain why in this article I authored in this link:
You have raised a relevant topic. Thanks.
Gary … Gary Cokins
Samuel Dergel says
Thank you Gary.
I fully agree that Finance has lots of room for improvement to assist Sales and Marketing functions, both at the C-suite level, as well as in the day-to-day interactions between the groups.
I had one example just last week of a CFO coaching client of mine who went the extra mile on this exact topic, making a continuous significant impact on the bottom line with just one suggestion.
The key part for the CFO is to be part of the conversation, and this takes planning and effort. Understanding the CFO Relationship Map is a good place to start. http://dergelcfo.com/2014/11/05/the-c-suite-relationship-map/
Thanks for sharing Gary!
Peter Brandt says
Hmm…I’m a finance under-grad major, who now does marketing. It’s been many years since that finance degree, and my learnings since then, have made me question what the fundementals of what business are, especially being in marketing roles.
The first premise – the purpose of a business is to make and increase profit – my finance background.
My marketing/sales insight since then – the purpose of a business is to satisfy customers.
I know, many of you will say, just combine the two, then we’re on the right track.
But, can you? When Amazon was going public and Jeff Bezos, a former investment banker by the way, was writing the first open shareholder letter, he emphasized customer satisfaction as the overarching goal of the company. And, purposely eschewed short-term profitability as playing a part in decision making. Mind you, at the time Amazon was selling books online, thinking about selling music, too. History now records Amazon as the model of how to create and run a successful internet company, and many, would argue, any company. The competitors at the time, Yahoo, AOL, eBay, etc., are now shadows of Amazon, having focused on short-term profits.
Who is winning, and why?
So, having marketing report to the CFO, what is the driving decision criteria?
For marketeers, we strive to do many things. We do extensively use analytics now, true. But, the heart of marketing is about creating satisfied customers, especially long-term, loyal customers.
For research, as most marketers still try to predict future markets, those analytics use financial data, true. But, that financial data is primarily aimed at predicting who are potential customers, how much could/would they pay for a product or service, and the predicted revenue. Costs? Let the design and operations people figure that out. Hence, profitability in the research scenario is secondary. The big question is, is there a market?
For, creating a brand, positioning, creating awareness, again analytics are used, but moreso to determine impact of what’s happening. Are those customers, who supposedly ought to be buying that product/service, aware and engaging? This is mostly about customer counts, who’s looking/engaging where, how they are responding, etc. It’s all about the customer.
Finally, actually moving customers to purchase – generating leads. Again, it’s about helping potential customers make good decisions in their buying process. It’s not about fooling them just enough to either buy on impulse, or getting them into a sales cycle either they or the company will live to regret. Can analytics be used to measure effectiveness, and ROI, yes, but to hone the marketing engagement process, content to improve? The objective is not to start with the premise of profitability, rather, what will work for customers.
So, for me, the purpose for marketing, and the purpose for finance are not opposite, they should support each other. But, the question driving marketing should be what’s best for our customer? And, that should drive what gets done. Profitability can help measure the decisions, but as Amazon has illustrated, what’s most profitable at the moment, and what is best for the customer can be very different. As a marketer, I would go with the later, over the former, because that will sustain the company long term. Without customers, there is no profit.
Will a CFO have this same outlook? Can they really just take profit into consideration, but really focus on customer needs? History says no.