With social media companies like Twitter, Instagram and TikTok capturing billions of worldwide subscribers, content and advertising delivery have never been as instantaneous and far reaching. Consumer marketing teams are recognizing this potential exposure. Statista notes that nearly $300 billion was spent on digital advertising in 2019, nearly double the global spend just four years prior and the uptick in marketing spend will continue to skyrocket each year. Given the increase of digital marketing spend on these platforms, it is more important than ever that Finance and Marketing teams work in tandem to stay ahead of the consumer demand curve while contributing to a healthy bottom line.
In this article, I will outline key points to consider for Finance teams looking to develop effective partnerships with their Marketing organizations during times of rapid change.
Know The Basics: Finance and Marketing Perspectives
Marketing stakeholders typically expect that their counterparts in Finance will not understand the vast array of details needed to execute a successful marketing strategy. In the same way, Finance would not expect their colleagues in Marketing to know how to perform analyses to predict market factors like foreign exchange and inflation.
However, Finance and Marketing having a grasp on their counterpart department’s fundamentals will go a long way to earning the respect of the team. A great way for any Finance professional to get to know the Marketing business is to sit with the team on their day-to-day activities. They can reach out to a colleague with a similar level of experience and/or with a similar title and ask if they would be willing to chat about their experience over coffee. In the meeting, ask for clarification on unfamiliar industry terms and follow up the discussion with a thank you note. Coffee meetings provide a casual setting where employees can step outside of their roles for a short time and be a little more open than they might be in a formal setting. If a coffee meeting went particularly well, go one step further and request to shadow them for a few hours. You may be surprised at what you can learn just by observing.
Even after making the effort to expand on your knowledge, keep in mind you don’t know what you don’t know, and understand there will be blind spots in the future. Earn the respect of your stakeholders by staying curious and ensure they understand you are coming to them on an equal playing field.
Each department is its own silo. It is a chief function of executive leadership to ensure company-wide goals and principles are known and upheld. Almost as paramount is the ability to recognize where disconnects might exist. When the industry landscape undergoes a change, like the one brought on by social media, it becomes crucial for all organizations to understand how their course of business may be affected. Bridge the gap by holding quarterly or bi-annual town hall meetings where department leadership can present on key topics, such as the need to embrace digital advertising spend.
For example, a trending topic that might benefit from broader understanding is the rapid growth of Digital Upfronts in the Media space. Digital Upfront agreements cover an array of advertising channel options though companies like Google, Amazon and of course, all major social media platforms. During a town hall, Marketing might present on the types of advertisements offered through an annual Upfronts deal, such as custom Snapchat filters, Twitter homepage takeovers or 30-second YouTube spots via Google. The fiscal impacts of each can vary based on package and overall spend commitment. For example, some vendor platforms might offer a discount on products once reaching a certain tier of spend, while others might promise premier access to limited products with a revenue share guarantee, opportunities for IP licensing or a longer contract term.
Following the presentation, cross-line of business discussions will allow Finance to offer best practices for spend tracking and savings calculations, which might include hypothetical forecasts based on spend endeavors and projected product discounts.
Encouraging Regular Collaboration Between Finance and Marketing
The benefits to both teams working together are boundless, and one of the most difficult parts can be fostering a relationship that resembles an equal partnership. In corporations, stakeholders like Marketing or Operations will often cringe at the mention of Finance. Due primarily to budget restrictions and perhaps partially to personality differences, the relationship between these teams can be tenuous.
Once you have made an effort to understand their business, be sure to keep the lines of communication open between both teams. Often, Finance will be one of the first departments to hear about budget reductions or company-wide savings targets. Be conscious of what information should remain confidential but be open with what can be shared. If the Marketing team would benefit by knowing about an upcoming expense reduction, let them know. Teams like Marketing often plan their creative campaigns out for the entire calendar year and any changes to their spend allotment will upset those plans. Be considerate of the team’s needs and be as transparent as possible when it comes to known changes.
Steve Olenski of Forbes echoes this sentiment. “Make sure both sides have a regular, sit-down session where marketing can explain the upcoming campaigns and what kind of funds they’ll need,” he writes, “and finance can explain just how and why certain bottom-line number must be met.”
Through regular collaboration, both teams should reach a point of comfort where each is able to speak their minds while understanding there are limits to both sides of the conversation. On the topic of increasing digital advertising spend, for example, Marketing might develop a “blue sky” campaign strategy, where each campaign is planned with the maximum amount of resources, regardless of budget.
In a healthy cross-departmental relationship, Marketing would then bring in Finance to help narrow down the strategy to be within the bounds of the budget. These conversations might include negotiations to increase spend to social media first-views or takeovers while reducing spend allocated to banner ads. At some point, Marketing might argue that no further reductions to budget can be made without damaging the effectiveness of the overall strategy. From here, Finance will either step in to reiterate a firm budget number or work with Marketing to determine returns that may offset spend. The ideal outcome of these discussions is to arrive at a compromise that leaves Marketing feeling fulfilled without breaking the bank, but both sides of the table should be prepared to acknowledge this is not always possible.
Finance and Marketing Working Together in Real-Time Execution
Once both teams are on the same page, each can work together to develop fiscally responsible strategies. The shift in marketing spend toward digital holds obvious financial benefits, but it is imperative that financial principles be considered during the regular course of business. While Marketing teams are experts in deploying successful marketing mix strategies, Finance teams can offer supplemental assistance. To improve upon spend accuracy, Finance can provide in depth analyses and, through collaboration with Marketing can outline savings opportunities to implement during negotiation discussions.
Marketing will have a firm grasp on the cost of each element of each campaign. Finance can step in to help accurately track spend as it is actualized and set up models to better predict future spend. In the case of Digital Upfronts agreements, Finance should work as an extension of the Marketing team, offering spend and savings projects on an annual basis, at the time of Digital Upfronts contract negotiations. Then, as each campaign launches throughout the year, Finance may work in real-time with both the Marketing and Media teams and any external advertising agencies to gather spend data which will contribute both to the overall endeavors as well as toward any relevant product discounts. By working with Marketing to allocate remaining funds across the year, Finance can uphold a conservative approach to expenses while Marketing works to ensure maximum consumer reach across the digital space.
Creating Partners of Finance and Marketing
As digital advertising on social media platforms continues to grow into the future, Marketing and Finance teams must work together to tackle an age of rapidly growing expenses. Through open and regular communication and collaboration, each team will contribute to the success of the company while working in harmony toward the same goals.
To learn more about encouraging collaboration and cross-departmental traction toward goals, download our Operational Review Program ebook! It offers useful approaches to remove organizational silos and maintain progress toward business objectives: