NOTE: For readers not familiar with corporate jargon…
ROI stands for “Return on Investment”
CMO stands for “Chief Marketing Officer”
CFO stands for “Chief Financial Officer”
EBITDA stands for “Earnings Before Interest, Tax, Depreciation and Amortization”
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The great Tom Fishburne has produced another great cartoon that draws attention to an issue in the world of mainstream marketing.
CMOs and CFOs often speak completely different languages. This can create a lack of understanding and appreciation for the role and impact of marketing on the business.
Mastercard CMO Raja Rajamannar calls this the “existential crisis of the CMO.” He says it’s essential for marketers to think and talk more like business managers than communications experts. As Raja says,
“Because many CMOs have risen through the creative route, much more than the financial route, they are like a rabbit caught in the headlights. They talk about jargon and marketing KPIs, which the CFO and CEO could care less about – they are looking for financial results. Is customer growth happening, is my profitability increasing, what is marketing doing to my EBITDA?
“In that scenario, some companies are losing patience and replacing CMOs with a chief revenue or chief growth officer. Some are not even from a marketing background. When that happens at several companies, that is an existential crisis.”
Original post at “the roi of marketing”.
My goodness…management at some companies are demanding to know if advertising and marketing is actually making money!
Of course, direct response marketers will either be scratching their heads wondering what the fuss is about OR…
…smiling wryly that reality has caught up with some mainstream marketers.
One of the great things about direct response marketing and advertising is that the results are measurable and so the ROI or profitability is clear.
What is remarkable is that 95 years since the publication of Scientific Advertising by Claude Hopkins…
…some companies are still struggling with the question…”What is the ROI of our marketing?”
Hopkins had spent his long and very successful career figuring out what worked in marketing and advertising. He was so successful and confident in his methods that he felt able to write…
“The time has come when advertising has in some hands reached the status of a science. It is based on fixed principles and is reasonably exact. The causes and effects have been analyzed until they are well understood.
The correct methods of procedure have been proved and established. We know what is most effective, and we act on basic law.
Advertising, once a gamble, has thus become, under able direction, one of the safest business ventures.”
I am sure that Hopkins would be astonished at the state of mainstream advertising and marketing today. I guess there are a couple of caveats in his statement…”in some hands”…and…”under able direction”.
“Scientific Advertising” is often quoted but not read so much. It’s not a particularly long book and well worth the read.
If you’re pushed for time, an alternative is my primer “Scientific Advertising in the 21st Century”.