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Bulletin: The Finance Department Doesn’t Trust Marketing ROI Claims

July 16, 2008 by Kami Huyse

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numbers numbers numbers

And apparently, the marketing people don't entirely trust their own measures either.

The research was carried out by Aegis Group's Marketing Management Analytics (MMA); Financial Executive, published by Financial Executives International, a trade association; and Ed See, former president of MMA and principal of Ed See Associates.

According to an article in Advertising Age, the study found that "six in 10 financial executives believe their companies' marketing departments have an inadequate understanding of financial controls, and seven in 10 said their companies don't use marketing inputs and forecasts in financial guidance to Wall Street or in public disclosures."

The study also said that a marketing department's return on investment numbers were not taken into consideration when setting budgets. Instead, most are setting budgets based on a percentage of revenue and/or the last year's budget. This means that the Marketing/PR function continues to be seen as a cost center.

The research used an online survey of 130 financial executives across a range of industries. More than 80% of respondents were chief financial officers.

Most of them (80%) were happy with what the spending accountability of marketing departments and four out of five had ROI measures in place. However, fewer than four in 10 said that marketing forecasts would stand up to the scrutiny of a standard corporate audit.

And the marketers in the survey also were also concerned that their numbers might be suspect, with only 14% of marketing executives feeling that senior management had confidence in their marketing forecasts.

Mostly, it seems the finance department is looking for measures that show dollars and cents, and marketing departments – under which the PR function often falls – would do well to look at ways to partner with closely with the finance department to choose metrics.

Certainly inflated ad values for PR, and other such measures do not "cut the mustard" when it comes to winning over the CFO.  So why not use measures that will?

Photo by Emmeline Guest

Filed Under: Measurement

About Kami Huyse

Kami Watson Huyse, CEO of Zoetica, is passionate about great communication. Working in Public Relations since 1994, and blogging since 2005, she has seen trends come and go, but one thing has stayed the same – people are looking for ways to authentically connect. She loves to connect with readers, so leave a comment or follow @kamichat on Twitter and connect there.

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